Is Novo Nordisk Positioned for Recovery in 2026 Amid Rising Competition and AI Innovations?

TradingKey - Since 1923, Novo Nordisk (NVO) has thrived as a pharmaceutical company based in Denmark, primarily focusing on two business areas: Obesity and diabetes, and Rare Diseases.

Globally, Novo Nordisk is known for producing an array of long-lasting glucagon-like peptide-1 (GLP-1) traeatments that manage Type II Diabetes and substantially promote weight loss among its patients.

For the last two years, however, the company has struggled in both of these core business lines; its clinical trials have provided disappointing results and its market share of the obesity management marketplace is at risk of continued decline. Now, as Novo Nordisk management focuses on developing expectations for earnings for 2026, it seems the company is no longer enjoying its status as a “blockbuster” business.

How Novo Nordisk’s Stock Got Hyped—and Why It Crashed

The stock price increased as the number of patients and doctors requesting injectable GLP-1 drugs surged. The tight supply of drugs early on also added to this hype because many believed that there would be a never-ending demand for these drugs. 

After manufacturing capacity was built out and inventories returned to normal, widespread quarterly growth for the drugs dropped from 3x to 2x. This caused a lot of uncertainty for investors because they had only been used to companies growing 3x or greater. The subsequent decline in stock price of these companies was due to the rapidly declining stock price and also due to an increasingly competitive market. 

Eli Lilly (LLY) gained traction as an established competitor due to their dual mixture of GLP-1's and dual agonist data. 

Smaller pharmaceutical companies such as Viking Therapeutics (VKTX) reported early positive results, which only added to investors' concerns regarding future commoditization. 

The overall decline in the stock prices of these companies represented more than just economic fundamentals; it indicated that the market sees these companies transitioning from being considered high-growth to becoming more mature with credible competitors on the cusp of competing with the same customers as these companies were, and therefore posing significant risks to these companies continuing to see their revenues grow.

AI Ambitions: The OpenAI Partnership and the 5% Problem

Novo Nordisk has partnered with OpenAI to utilize artificial intelligence for new drug discovery and development.

According to Novo Nordisk's management, the use of artificial intelligence in drug R&D will allow for quicker identification of targets, selection of candidates, and design of clinical trials.

Novo Nordisk also intends to integrate AI technology into its production processes. According to CEO Mike Doustdar, the goal is to use AI technology to aid in diabetes and obesity. Novo Nordisk has a vast resource of clinical data for diabetes and obesity that can be leveraged to create either positive or negative AI solutions from clinical trials.

A 5% reduction in overall development time and cost for a product would create a significant amount of savings when multiplied across all of the products in Novo Nordisk’s pipeline; these savings could then be reinvested into drug research and development or potentially returned to shareholders. 

It is important to remember that Novo Nordisk’s AI initiatives will not provide short-term returns; the competitive hurdle for success with AI technologies will be very high due to Eli Lilly’s significant investment in the largest AI supercomputer within the pharma industry and the company’s broad rollout of its own AI-based initiatives throughout the value chain.

Clinical Readouts That Matter in 2025

Amycretin, a diabetes- and obesity-treating drug which is currently going through beta-phase testing (Phase III), will be a key product as Novo Nordisk expands its effectiveness and adherence benefits over other products. UBT251 is an experimental weight-loss drug based on three types of gut hormones that have been proven to be effective in helping people lose weight, while at the same time providing a tolerable experience to prevent them from discontinuing it.

In addition to the primary care portfolio, Novo Nordisk's Etavopivat drug has displayed good Phase III results in the treatment of sickle cell disease and adds optionality beyond diabetes and obesity and will provide further opportunities to distribute risk of revenue concentration over an extended period of time. 

Other examples include combination therapy products such as CagriSema (targeting three gut hormones), and investments in oral formulations with the goal of addressing additional disease states that include heart failure, chronic kidney disease, and possibly neurodegenerative diseases. If these drugs hold up, they could support an acceleration in sales growth and revenues even while the GLP-1 market matures.

Novo Nordisk released on April 2, 2026, findings from its ORION trial comparing the efficacy of oral semaglutide 25 mg vs. orforglipron 36 mg through a population-adjusted indirect treatment comparison drawing from OASIS 4 and ATTIN-1 studies. 

According to the analysis conducted, oral semaglutide demonstrates greater mean weight loss and orforglipron, compared to oral semaglutide, has 14 times the odds of discontinuing because of GI adverse events and approximately four times the odds of discontinuing for any reason. 

The researchers controlled for baseline characteristics such as sex and body weight, but noted that protocol differences and low event counts limit the precision of those estimates. 

The researchers plan to present those results at the OMA Annual Conference 2026 to assist healthcare professionals with clinical decision-making. The overall message is that the tolerability and adherence of the medications will be key competitive factors in addition to efficacy, as more medications will be introduced into the market.

2026 Outlook for Novo Nordisk

Anticipating a sales drop for 2026 sets low expectations for near-term performance, so as such, there are still low expectations around timelines for new clinical launches and lifecycle management—making this timing all the more critical. 

If AI-derived efficiencies begin to permeate either drug development or manufacturing during this timeframe (even minimally), the effect could relieve some cost pressures and additionally could enhance throughput; however, the timeline for AI to begin having an impact on performance is uncertain. 

Competition will evolve in both the injectable and oral categories, so Lilly’s investment in its AI capability bodes well for sustaining an innovation and operational advantage over time. Success with non-core prospects such as Etavopivat will provide revenue diversification from core businesses and help mitigate the potential negative impact of a weaker business year on Lilly’s total revenue cycle.

Valuation Reset and the Case for Patience

Following a drastic reduction from their peak values, the forward price/earnings ratio is now reflecting worries of a potential rapid loss of market share coupled with long-lasting slowing growth rate; however, there is not enough information on the clinical or epidemiological data to justify these fears. 

A true value trap would be characterized by a significant drop in volume, a collapse of pricing power or a pipeline without the ability to replenish growth; this is not currently the case for Novo Nordisk since they are leaders in both diabetes and obesity markets, have increasing number of oral and combination options, and a number of potential indications in adjacent markets, as well as an overall large underpenetrated market. 

With these low expectations, even slight upgrades from what was previously perceived would allow room for a longer-term upward movement in the stock price; however, because expectations change on a continual basis (with each data point), investors should be prepared for extreme price variations as new narratives are established around the company.

Key Risks for Novo Nordisk Investors

The main risk is competition, as participants in the marketplace compete with one another for high levels of efficiency, effectiveness, convenience and cost, while companies like Eli Lilly are exploring ways to expand their use of Artificial Intelligence (AI) across multiple industries. Clinical risk will always exist; clinical development programs such as Amycretin and UBT251 are both expected to be cleared from safety and efficacy perspectives. 

Operational complexity around the manufacture of products may also come up again if the level of demand exceeds the supply of product available, or if the increase in the volume of product improves the overall quality of a new product. As new product options are introduced into the marketplace, payers may limit access to certain products and thus impact adherence and net price creation. 

The manufacturer concentration risk that exists with GLP-1s also creates increased sensitivity to any safety signals or disruptive alternative methods. Some investors believe that individual AI stocks currently have more upside and less downside risk, highlighting the opportunity cost of holding invested capital through a transition period back into the stock market.

Should You Buy Novo Nordisk Now?

Novo Nordisk offers discounted valuations that are exposed for the long haul, have a maturing pipeline, and have real AI initiatives that could shorten R&D timelines and costs slightly while compounding benefits across their businesses (they will see compounding benefits). 

While there are plausible near-term risks and a potential weak patch until 2026, the overall long-term set-up has low GLP-1 penetration rates, more indications for use, and a solid competitive position and continues to be solid after the reset. 

While the stock is not going to become obsolete from just one drug, investors who exhibit patience will be more rewarded in the long run than those who hurry to sell; therefore, a return to steady compounding will be through clinical product delivery and will not be via past euphoria.