Prediction: Alphabet Will Join the $5 Trillion Club and the Dow Jones Industrial Average in June

The Dow Jones Industrial Average (DJINDICES: ^DJI) will celebrate its 130th anniversary on May 26. But the historic index looks nothing like it did over a century ago.

The Dow of today is chock-full of tech-focused companies, with Salesforce swapping with ExxonMobil in 2020, Amazon trading places with Walgreens Boots Alliance in 2024, and Nvidia taking Intel's spot in 2024.

Adding tech stocks has made the Dow more representative of the modern stock market. But one critical flaw of the Dow is its drastic underweighting of communications stocks, with just a 2% weighting in the sector compared to 11% in the S&P 500 (SNPINDEX: ^GSPC).

Here's the catalyst that could pave the way for communications giant Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) being added to the Dow in June and why the stock has room to run higher and join Nvidia in the $5 trillion club.

Image source: Getty Images.

The Dow is ready for Alphabet

Unlike the S&P 500 or Nasdaq-100, which are weighted based on market cap, the Dow has maintained its long-standing tradition of being price-weighted. The Dow's price-weighted nature means the heaviest-weighted components aren't necessarily the most valuable companies. In fact, 16 of the Dow's 30 components are weighted more heavily than Nvidia, even though it's the most valuable company in the world.

Stock splits tend to instigate Dow shake-ups because they drastically change its composition. Apple's 2020 stock split was the catalyst for adding Salesforce, Amgen, and Honeywell International (NASDAQ: HON) and for booting RTX, ExxonMobil, and Pfizer. Similarly, Sherwin-Williams' stock split in 2021, Amazon's split in 2022, and Nvidia's stock split in 2024 paved the way for adding all three stocks to the Dow in 2024.

Similarly, Alphabet split its stock in 2022. So if it were added today, it wouldn't upset the index's balance. And the good news for Alphabet is that it doesn't need one of the existing Dow components to undergo a stock split to justify its inclusion.

Honeywell's spin-offs challenge its role in the Dow

Since being added to the Dow in 2020, Honeywell has drastically underperformed the S&P 500, the Dow, and RTX, the company it replaced.

Honeywell was added for its global presence across several key end markets and its technological innovation in the Industrial Internet of Things. But the company has struggled to capitalize on these exciting trends. So it spun off its advanced materials business in October 2025 and plans to spin off Honeywell Aerospace on June 29, leaving the existing Honeywell focused on industrial and building automation. That's reason enough to replace Honeywell in the Dow, but I doubt the index will swap back in an industrial stock or defense contractor.

Caterpillar (NYSE: CAT) is up over fourfold in the last three years. It has benefited massively from the surge in construction and demand for specialized industrial machinery from artificial intelligence (AI) data centers, as well as from the booming oil and gas industry.

Caterpillar now makes up 10.7% of the Dow, which takes the pressure off the need to replace Honeywell with another industrial stock. Swapping Alphabet for Honeywell makes a ton of sense, as Alphabet would add a blend of artificial intelligence (AI) exposure, media through its ownership of YouTube, cloud computing through Google Cloud, quantum computing, self-driving cars through Alphabet-owned Waymo, and more.

Alphabet checks all the boxes of a blue chip stock

Even if Alphabet doesn't replace Honeywell in June, the company will almost certainly be added to the Dow in the coming years due to its leadership across multiple industries. With a market cap of $4.81 trillion, Alphabet is within striking distance of joining Nvidia as the second company in the exclusive $5 trillion club. And despite more than tripling in price in the last year, Alphabet stock remains an excellent value.

Last summer, investors were skeptical that Google Search could protect its market share from an onslaught of AI-powered tools. But Alphabet has had tons of success incorporating AI features into Google Search and expanding its Gemini large language model (LLM).

Google has also been leading the cloud computing industry in custom chip design. Its eighth-generation Tensor Processing Unit (TPU) chips include the TPU 8t for training and the TPU 8i for inference. These chips reduce Alphabet's dependence on costly Nvidia chips, provide a cost-effective way to scale Google Cloud data centers and generate an additional revenue stream from selling TPUs to a select group of customers.

Alphabet is an incredibly unique company because it produces sizable free cash flow from established segments like Google Search and YouTube, which it can use to fuel investments across the AI value chain at the LLM, infrastructure, application, self-driving, robotics, and silicon levels.

At 27.8 times forward earnings, Alphabet is no longer in the bargain bin, but it's still a good value for long-term investors looking to anchor their portfolio with what is arguably the world's most balanced growth stock.

Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Amgen, Apple, Caterpillar, Honeywell International, Intel, Nvidia, Pfizer, RTX, and Salesforce. The Motley Fool recommends Sherwin-Williams. The Motley Fool has a disclosure policy.