Key points
- Novo Nordisk and Nvidia announced a groundbreaking partnership to develop supercomputers focused on pharmaceutical and other healthcare applications.
- The project involves building a supercomputer in Denmark using Nvidia’s DGX SuperPOD and other AI-focused Nvidia equipment.
- Eli Lilly, Novo Nordisk’s rival in the weight loss category, is working with Chinese company XtalPi to accelerate drug discovery and development using AI.
- 5 stocks we like better than NVIDIA
Two of the biggest investment themes of the year, artificial intelligence and obesity drugs, are finally coming together. Novo Nordisk A/S NYSE:NVO And Nvidia Corp. NASDAQ:NVDA announced a partnership to develop supercomputers.
Alongside Nvidia’s developer conference in March, the Novo Nordisk Foundation announced that it would build a supercomputer in Denmark using a Nvidia DGX SuperPOD, an AI data center supercomputer. The project will also use other Nvidia equipment designed for large-scale AI language modeling.
The Novo Nordisk Foundation owns a majority stake in pharmaceutical giant Novo Nordisk.
The Danish Export and Investment Fund is also an investor in the project, designed to help Danish researchers work with Nvidia teams to collaborate on pharmaceutical and biotechnology projects, among others.
AI Computing Power for Healthcare Applications
“Drug discovery, disease diagnosis and treatment, and complex life science challenges are examples of areas where the extreme computing power of AI can enable a positive transformation of our society” , said Mads Krogsgaard Thomsen, CEO of the Novo Nordisk Foundation, in a statement.
The use of artificial intelligence is not new to the pharmaceutical industry.
For example, in 2023, Eli Lilly & Cie, NYSE:LLY, Novo Nordisk’s arch-rival in obesity and diabetes treatments, has teamed up with pharmaceutical technology specialist XtalPi to identify potential drug candidates. The goal is for Lilly to accelerate the clinical trial and commercialization process.
Other major pharmaceutical companies that have joined forces with Chinese company XtalPi include Pfizer Inc. NYSE:PFE And Johnson & Johnson NYSE:JNJ.
Weight Loss and Diabetes Drugs Send Stocks Soar
Novo Nordisk and Lilly are two of the largest pharmaceutical stocksby market capitalization.
Lilly is the largest pharmaceutical company in the SPDR Fund for Selected Healthcare Sector NYSEARCA: XLV. Its recent growth, like that of Novo Nordisk, is due to the success of drugs against obesity and diabetes.
Because it is based in Denmark, Novo Nordisk is not part of the S&P 500, but its value exceeds that of Johnson & Johnson, Merck & Cie Inc. NYSE:MRK And AbbVie Inc. NYSE: ABBVthe three largest pharmaceuticals in the S&P, after Eli Lilly.
Optimistic news about the diet pill
The race toward better weight-loss drugs has similarities to the race toward faster and better AI processing chips. This places not only Nvidia, but also Eli Lilly and Novo Nordisk in the ranking of the most valuable companies in the world.
On March 7, Novo Nordisk’s stock soared nearly 9% following upbeat news about clinical trials of the weight-loss pill amycretin. You can see this gap on MarketBeat 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 that if the pill version of the anti-obesity treatment is more effective than Wegovy, it could also be more effective than the diabetes drug Ozempic, which contains the same ingredient as Wegovy.
Plus, what patient wouldn’t prefer to take a pill rather than an injection? Even those who don’t mind an injection would appreciate the greater convenience of a medication in pill form.
For its part, Nvidia has made inroads into the healthcare sector, and not all of them will likely be well-received.
Nvidia’s growing focus on health
On March 19, also as part of its developers conference, Nvidia announced that it was collaborating with a company called Hippocratic AI on technology in hopes of establishing an emotional connection with patients.
Nvidia has also partnered with the AI leader Microsoft Corp. NASDAQ:MSFT advance the use of generative AI in healthcare settings. The partnership aims to accelerate drug discovery and clinical research, similar to Eli Lilly’s use of AI.
In addition to pharmaceutical product development, Nvidia and Microsoft’s healthcare partnership will focus on diagnostic imaging and precision medicine.
Finally, Nvidia announced a partnership with GE Healthcare Technologies NASDAQ:GEHC develop A technologies for ultrasonic applications.
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