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The AI and GLP-1 revolutions have taken off over the past two years as companies surged to build up computing power and individuals turned to injectables to manage weight loss. Not only has this had tremendous impacts on the main two companies in these respective fields—NVIDIA and Novo Nordisk—but there have also been significant spillover effects to unrelated industries.
We decided to see which companies saw the greatest spillover effects from these two revolutionary technologies. It may come as no surprise that for NVIDIA we saw tremendous positive spillover effects to genomic and autonomous tech firms. For Ozempic we saw tremendous negative spillover effects on the restaurant industry and plus-sized fashion.
To undertake this study, we first isolated six dates, each where major announcements were made on approval or trial successes/failures. For Ozempic (Novo Nordisk), we isolated the dates where Wegovy and Ozempic showed cardiovascular benefits in the study, promising results for diabetes and approval dates for these uses as well.
On the negative news side, we looked at dates when drug delays were announced and major delivery forecasts were missed. For NVIDIA, we examined major sale announcements and earnings beats on the positive side, and for negative news dates, we examined earnings miss events and where export controls were placed on deliveries to China.
Key findings
With these dates in hand we then looked at how other companies in unrelated fields reacted to these announcements. We looked at the average abnormal returns in a (-1,+1) window around the announcement date of the positive and negative news for both of the companies. Abnormal returns for each company were measured net of the S&P 500 returns over the same time period.
The first interesting finding is that for NVIDIA, we saw significant positive abnormal stock price reactions to the ARK Innovation ETF (ARKK), the ARK Genomic Revolution ETF (ARKG) and the ARK Autonomous Technology & Robotics ETF (ARKQ) as well when positive news came out about NVIDIA. And all these funds fell in value when negative news came out about NVIDIA (on an abnormal return basis).
Turning toward Novo Nordisk (Ozempic), we see a slightly more complex story. When positive news came out about Novo Nordisk, we saw a negative abnormal price reaction for restaurant ETFs, McDonalds, Krispy Kreme and Torrid Holdings (plus-sized fashion). When negative news came out about Novo Nordisk, we saw a positive abnormal stock return from restaurant ETFs, McDonalds, Krispy Kreme and Torrid Holdings.
Yet, the interesting thing is that the results are mixed for Peloton and Planet Fitness. Although one may expect a negative reaction to healthcare/gyms with Ozempic coming out, we saw price increases for Peloton and Planet Fitness, going against intuition.
In all, the results highlight just how these revolutionary technologies can impact industries far outside of their field. NVIDIA’s rise has drastically impacted areas like genomics and autonomous driving for the positive, and Ozempic has drastically impacted junk food, fast food and plus-sized fashion for the worse.
Derek Horstmeyer is a Professor of Finance at George Mason University's Costello College of Business. Nitish Shah is a senior at Chantilly HS and is interested in pursuing a career in financial markets, mergers and acquisitions, and asset management. Matthew Rickard is a Finance and Accounting major at George Mason University and Incoming Operations Analyst at Morgan Stanley.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
