Amazon to replace Walgreens in Dow Industrial Average next week

Amazon will replace Walgreens Boots Alliance in the Dow Jones Industrial Average, according to a Tuesday announcement from S&P Dow Jones Indices, which manages the price-weighted measurement of 30 stocks. Amazon shares moved up 1% in extended trading, and Walgreens stock moved 3% lower.

The move will result in more exposure to the online retailer for investors who bet on the average, which is far smaller than the S&P 500 index. The change goes into effect prior to market open on Feb. 26.

"Reflecting the evolving nature of the American economy, this change will increase consumer retail exposure as well as other business areas in the DJIA," S&P Dow Jones Indices said in a statement.

The company said the revision was "prompted" by Walmart's 3-for-1 stock split, resulting in lower index weight for Walmart.

Today's Amazon is more than just "the leading online retailer of books," which is how the company described itself to investors before its 1997 initial public offering. Since 2021, it's been run by Andy Jassy, who built up Amazon's cloud business. That segment leads the market, giving Amazon 14% of revenue and most of its operating profit.

Jeff Bezos, Amazon's founder and the only CEO before Jassy, is the company's executive chair. The world's second wealthiest man based on one measurement, Bezos has unloaded billions in stock in recent weeks.

Beyond cloud, there's revenue coming in from Amazon promoting products in search results. Amazon's advertising business delivered 27% revenue growth in the fourth quarter, faster than at Alphabet, Meta and Microsoft.

Amazon's arrival in the Dow Jones comes three years after business software maker Salesforce joined, along with Amgen and Honeywell International.

Walgreens has been a Dow