Two of the year’s biggest investment themes, artificial intelligence and anti-obesity drugs, are finally meeting up, as Novo Nordisk A/S (NYSE: NVO) and Nvidia Corp. (NASDAQ: NVDA) announced a partnership to develop supercomputers.
In tandem with Nvidia’s developers’ conference in March, the Novo Nordisk Foundation said it would build a supercomputer in Denmark using an Nvidia DGX SuperPOD, an AI data center supercomputer. The project will also use other Nvidia gear designed for large-scale AI language modeling.
The Novo Nordisk Foundation has a controlling interest in pharmaceutical giant Novo Nordisk.
The Export and Investment Fund of Denmark is also an investor in the project, which is designed to help researchers in Denmark collaborate with Nvidia teams to collaborate on pharmaceutical and biotechnology projects, among others.
AI Computing Power for Healthcare Applications
"Drug discovery, disease diagnosis, and treatment, as well as complicated life science challenges, are examples of areas where extreme AI computing power can enable the positive transformation of our society,” said Mads Krogsgaard Thomsen, CEO of the Novo Nordisk Foundation, in a statement.
The use of artificial intelligence is nothing new in the pharmaceutical industry.
For example, in 2023, Eli Lilly & Co., (NYSE: LLY), Novo Nordisk’s big rival in the business of making anti-obesity and diabetes treatments, teamed up with pharmaceutical technology specialist XtalPi to identify potential drug candidates. The goal is for Lilly to accelerate the process of clinical trials and commercialization.
Other big pharmaceuticals that have joined forces with China-based XtalPi include Pfizer Inc. (NYSE: PFE) and Johnson & Johnson (NYSE: JNJ).
Weight-Loss and Diabetes Drugs Driving Stocks Higher
Novo Nordisk and Lilly are two of the biggest pharmaceutical stocks, by market capitalization.
Lilly is the largest pharmaceutical in the Health Care Select Sector SPDR Fund (NYSEARCA: XLV). Its recent growth, like Novo Nordisk’s, has been due to the success of anti-obesity and diabetes drugs.
Because it’s based in Denmark, Novo Nordisk Is not part of the S&P 500, but its value exceeds that of Johnson & Johnson, Merck & Co. Inc. (NYSE: MRK) and AbbVie Inc. (NYSE: ABBV), the next three largest S&P pharmaceuticals, after Eli Lilly.
Upbeat News About Weight-Loss Pill
The race toward better weight-loss drugs has similarities with the race toward faster and better AI processing chips. That’s put not only Nvidia, but also Eli Lilly and Novo Nordisk in the rankings among the world’s most valuable companies.
On March 7, Novo Nordisk stock gapped up almost 9% on upbeat news about clinical trials for weight-loss pill amycretin. You can see that gap on MarketBeat’s Novo Nordisk chart.
More Effective Than Injectable Treatment
Early indications show that amycretin may be more effective than Novo Nordisk’s current blockbuster drug, Wegovy, which is injectable.
Pharmaceutical analysts say if the pill version of the anti-obesity treatment is more effective than Wegovy, it may also be more effective than diabetes drug Ozempic, which contains the same ingredient as Wegovy.
In addition, what patient wouldn’t favor taking a pill over getting an injection? Even those who aren’t afraid of a shot would welcome the greater convenience of a medication in pill form.
For its part, Nvidia has been making inroads into the healthcare industry, and not all of them are likely to be well-received.
Nvidia’s Growing Focus on Healthcare
On March 19, also as part of its developers’ conference, Nvidia said it was collaborating with a company called Hippocratic AI on a technology with the hope of building an emotional connection with patients.
Nvidia has also teamed up with AI leader Microsoft Corp. (NASDAQ: MSFT) to advance the use of generative AI in healthcare settings. The partnership is intended to accelerate drug discovery and clinical research, similar to Eli Lilly’s use of AI.
In addition to the development of pharmaceuticals, the Nvidia and Microsoft healthcare partnership will focus on diagnostic imaging and precision medicine.
Finally, Nvidia announced a partnership with GE HealthCare Technologies (NASDAQ: GEHC) to develop A technologies for ultrasound applications.
