Definition
Stock in a large, established, financially sturdy company with a long record, often decades of profits and dividends. The name comes from the highest-value poker chip.
Why it matters
Blue chips are steadier than speculative stocks, but a handful of famous companies is still concentration, not diversification. Corporate giants do fade; broad index funds hold the blue chips plus everything that might replace them.
Example
An investor puts $20,000 into five household-name dividend payers yielding 2.5% and collects about $500 a year. It feels safe, yet five companies is five companies: a total-market fund would hold them alongside thousands of others.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.