(News Bulletin 247) – The rise of ChatGPT has created a stock market frenzy around several stocks directly or indirectly affected by generative artificial intelligence. The enthusiasm in the United States for anti-obesity treatments from Novo Nordisk and Eli Lilly has also upset investors’ expectations.

Financial markets are sometimes “victims of fashion”, as the rapper MC Solaar sang. Several trends have created a buzz in recent years, such as the surge in Spacs, the emergence of plant-based meat producers or 3D printing. But investors’ enthusiasm for these ephemeral themes very quickly waned.

The year 2023 was somewhat of an exception to the rule, in the sense that two new phenomena appeared and seemed set to remain a long-term part of the stock market landscape: generative artificial intelligence (AI) and the rise of anti-inflammatory drugs. -obesity.

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Nvidia the big winner in AI

The boom in generative AI had an impact on the stock market from the start of the year thanks to the popular success of ChatGPT, Open AI’s conversational robot, launched at the end of November 2022.

This new form of artificial intelligence promises sparkling prospects in data processing, improving productivity or the services offered to Internet users. “If data is the new gold, then generative AI is essential to improve its exploitation,” underlines asset manager Robeco in its annual outlook.

“It is difficult to underestimate the impact of technology on stock markets in 2023 and, in the longer term, the prospect of a significant increase in productivity through the use of generative AI technologies. “proves attractive,” notes Deutsche Bank.

According to a report from the consulting firm McKinsey, generative AI could increase labor productivity growth by 0.1% to 0.6% per year by 2040. The bank UBS, for its part, estimates that Generative AI could represent a $300 billion market in 2027, growing 61% over the 2022-2027 period.

The Eldorado that generative AI holds out to investors has resulted in a stock market frenzy around the companies that seem best equipped to ride the trend. The graphics card manufacturer Nvidia, whose products are used to provide computing power and thus develop conversational robots like Bard and ChatGPT, constitutes the leading figure of the “winners” of generative AI. Its revenues jumped 206% year-on-year in the third quarter, its stock price exploded by 240% and its market capitalization currently stands at more than $1.2 trillion, making it the sixth largest in the world.

But other lesser-known companies have benefited from the hype around generative AI.

Losers too

This is particularly the case for C3.ai, a software specialist in AI which gained 170%. The same goes for Bigbear.ai (+245%), a company specializing in AI analysis which recently obtained a major contract with the US Air Force. In France, Capgemini experienced a stock market surge in one session in the spring, propelled by the extension of a contract in generative artificial intelligence with Google Cloud, with the creation of a center of excellence.

“Generative artificial intelligence (AI) is one potential driver of increased corporate profits. But in most cases it will have only a limited impact on profitability next year,” However, Godman Sachs is nuanced in its outlook for 2024.

Generative AI has also experienced its first victims. In May, tutoring company Chegg fell sharply, after being forced to lower its targets due to “a significant breakthrough in student interest in ChatGPT.” In France, the main “victim” of generative AI is called Teleperformance. Although the outsourced customer relations group (such as call centers) assures that this new technology will strengthen it, the market fears the long-term impact on its economic model, in particular via an erosion of the prices of its services.

Novo Nordisk, new first European capitalization

The second major market trend emerged over the summer, at least on the stock market: the rise of anti-obesity drugs. “This is such an important trend that it is reshaping the entire health sector,” emphasizes bank Degroof Petercam.

A huge spotlight was given in August by the positive clinical trial results for Wegovy, owned by Denmark’s Novo Nordisk. These data showed that this anti-obesity treatment reduced cardiovascular risks by 20%. A few weeks later, Novo Nordisk even dislodged LVMH from its status as the largest European capitalization.

The Danish group has seen its stock price jump by 53% this year. The American group Eli Lilly, also specialized in antidiabetics, grew by 59% over the same period, while its drug Mounjaro was approved last month by the American health authority, the FDA, to treat obesity (the drug was already approved previously to fight diabetes).

Popular enthusiasm for these anti-obesity drugs is currently mainly concentrated in the United States and is still emerging. In a study released earlier this month, Bank of America projected that 48 million Americans could have taken an anti-obesity drug by 2030, up from 1 million today, according to their data. Remember that obesity is a scourge affecting 42% of American adults, according to the Centers for Disease Prevention and Control in the United States.

Jefferies estimates that “GLP-1” anti-obesity treatments (i.e. which mimic a hormone having several effects on glucose regulation and appetite) could represent a market of more than $100 billion. by 2031, 80% of which would be captured by Novo Nordisk and Eli Lilly.

Many repercussions

In view of these promising prospects, certain laboratories have accelerated their efforts to catch up in anti-obesity treatments. Switzerland’s Roche announced the acquisition of California’s Carmot for $2.7 billion in December, while Britain’s AstraZeneca concluded a licensing agreement with China’s Eccogene in November, with total payments potentially reaching $2 billion.

The rise of anti-obesity drugs has had second-order impacts. In fact, analysts and investors have been busy talking about the potential winners and losers from the growing adoption of these drugs. The food industry, such as the candy producers Hershey’s and Mondelez, or even Coca Cola, have clearly been placed in the first category, unlike the clothing groups which could benefit from “a cycle of replacement of guards”. dresses”, according to Bank of America (in short: people lose weight so they change their clothes).

“We are optimistic about the prospects (for anti-obesity treatments and appetite suppressant drugs, editor’s note), but we are monitoring potential secondary impacts,” emphasizes Janus Henderson. “These weight loss therapies help reduce appetite, and the growth in their adoption rate has caused volatility in the consumer staples, retail and restaurant industries as users of these treatments “We are increasingly focusing on reducing calorie intake. There could also be implications for health care utilization if obesity rates decline,” the company said.

“The potential impact of this drug is so broad that it has been felt across many industries, from medical technology to consumer staples, although the winners or losers from this medical breakthrough are not yet clear.” , says Degroof Petercam.