Stock Markets Beware Summer Scares. What Microsoft Must Learn From Novo’s $75 Billion Crash.

Novo Nordisk’s injectable weight-loss medication Wegovy (Scott Olson/Getty Images)

So much for a summer lull. While many investors are in “out of office ” mode, a dramatic selloff on Tuesday should underline how fast good stocks can go bad.

Shares of Novo Nordisk , the Danish drugmaker behind the blockbuster weight-loss treatments Ozempic and Wegovy, cratered 22% after the company cut its profit guidance, citing competition from cheap knockoffs.

Before the crash, which erased $75 billion in market capitalization, Novo was Europe’s second most valuable company. It now ranks eighth.

In comparison, the second-largest American company by market cap is Microsoft. It’s due to report after the closing bell. Imagine the chaos if it delivered an update that razed a fifth of its valuation.

That may seem far-fetched at a time when the tech giant is spearheading the artificial intelligence boom. But disruptors could also shake up that field.

The rise of Chinese company DeepSeek’s chatbot sparked a brief but brutal selloff in January. Although questions remain about how cheap that model really was to make, it’s a reminder that the current AI leaders’ dominance can’t be taken for granted.

The point isn’t that either AI or weight-loss drugs will end up being passing fads, it’s that the market tends to be poor at picking the winners at times of rapid tech advancement.

Cisco and Intel were two of the world’s biggest companies at the height of the dot-com boom a quarter of a century ago. Today, they’re nowhere near the Magnificent Seven megacap group.

Novo is a cautionary tale. Even in the quiet summer months, investors who own AI stocks should be on guard.

—George Glover

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Novo Nordisk Cuts Outlook Amid Weight-Loss Drug Competition

Novo Nordisk can’t shake the competition for its wildly popular Wegovy weight-loss drug, and has slashed its 2025 sales outlook because of it. In addition to a rival treatment by Eli Lilly, Novo is still contending with cheap knockoff drugs despite regulators’ moves to shut down that market.

• The Danish drugmaker briefly became Europe’s most valuable company during the early frenzy for the drug, but expectations for explosive sales have tempered since 2023. Investors may have been overly optimistic about the sustainability of sales growth given the competition and the complexities of the weight-loss market.
• Novo sought a change in direction, naming Maziar Mike Doustdar, who formerly led its international operations, to take over from CEO Lars Fruergaard Jørgensen. The move announced Tuesday surprised some who had expected Novo would name an outsider as its next leader.
• Knockoff drugs still being mass marketed by compounding pharmacies remain a challenge. Jørgensen said compounder sales volumes have remained consistently high despite regulators halting the sales as of May, and fewer people than expected are using Novo’s lower-price cash-pay option.
• Doustdar pledged to focus on improving commercial execution and cutting costs as Novo aims to increase its market share. Novo reports second-quarter results next week. It sees quarterly earnings of 5.96 Danish krone a share, slightly above the consensus estimate.

What’s Next: Novo now sees 2025 sales growth well below its forecasts in May and at the start of the year. Revenue now is expected to rise 8% to 14%. It originally expected 2025 sales to rise 16% to 24%, and lowered that in May.

— Josh Nathan-Kazis, Elsa Ohlen, and Janet H. Cho

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China Trade Talks Wrap Up For Now. The Tariff Deadline Looms.

A U.S. trade delegation led by Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer wrapped up two days of talks with China. They will brief President Donald Trump today after everyone returns to Washington. Talks were “constructive” Bessent said Tuesday, but they aren’t complete.

• Bessent confirmed that a 90-day extension on the current Aug. 12 deadline to reach a deal is possible, if Trump approves the plan. Tariffs on Chinese imports are currently set at 30%, but the president has threatened to raise that amount to as much as 145% if a deal isn’t reached.
• Greer acknowledged that the biggest concession that the delegation from China has made was to resume its exports of rare earth magnets to the U.S. after previously putting restrictions on that trade. Auto makers had warned of a possible shortage of the material.
• Trump suggested to reporters traveling with him on Air Force One that tariffs on India’s exports could be up to 25%, one percentage point less than he first threatened. Reuters reported the U.S.’ tariffs for India’s products could be 20% to 25%. “We’re going to see,” Trump said.
• Bessent told reporters in Stockholm after the trade meetings ended that both sides need to work through some details. A senior negotiator for China, Li Chenggang, said both sides would maintain timely communication on the issues.

What’s Next: Greer told reporters the U.S. denied an often-made request by the Chinese to ease restrictions on the sale of high-end microchips and the equipment used to make them to China. “It’s just kind of a standard ask,” Greer said. “It was not a topic of extreme discussion.”

— Anita Hamilton, Brian Swint, and Liz Moyer

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Berkshire’s Potential Railroad Deal For CSX Appears More Likely

Union Pacific’s blockbuster $85 billion deal to buy Norfolk Southern and create the first transcontinental railroad increases the odds that Burlington Northern Santa Fe railroad, owned by Warren Buffett’s Berkshire Hathaway, will reach a deal with CSX to create a second transcontinental railroad.

• Berkshire’s BNSF would benefit from the same advantages Union Pacific and Norfolk Southern highlighted: the ability to ship freight cross-country one to two days faster by bypassing interchanges, making railroads more competitive with trucking. Berkshire could pay cash in the deal with CSX.
• J.P. Morgan transportation analysts led by Brian Ossenbeck recently wrote that industry contacts broadly assume that BNSF “could not compete stand-alone if UP/NS merged.” While Union Pacific and BNSF compete in the western U.S., CSX and Norfolk Southern are the two major Eastern railroads.
• A deal for CSX would cost about $80 billion, assuming a price of about $41 a share, or 25% above where the stock traded when The Wall Street Journal reported Union Pacific and Norfolk Southern were discussing a potential merger earlier this month.
• Berkshire might have to pay nearly 25 times earnings for CSX to protect its BNSF investment, but has over $330 billion in cash after selling more than $100 billion of Apple stock last year. The deal would add 8% to Berkshire’s 2026 earnings, UBS analyst Brian Meredith said.

What’s Next: Buffett will likely decide whether to pursue CSX with Greg Abel, the Berkshire executive who will become CEO at year-end, and BNSF’s management. Ossenbeck wrote that conviction is low among his industry contacts about BNSF’s next move. Neither Abel nor Berkshire could be reached.

—Andrew Bary and Janet H. Cho

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Oil Prices Spike as Trump Threatens Russia With Sanctions

Oil prices jumped to the highest level in a month on Tuesday after President Donald Trump said he intends to place sanctions on buyers of Russian oil if Moscow doesn’t agree to a cease fire in Ukraine within 10 days.

• That’s good news for Big Oil companies, many of which have warned that lower crude and natural-gas prices will hit second-quarter earnings. Exxon and Chevron report on Friday. London-based Shell’s results are due Thursday, while BP earnings are out Aug. 5.
• Oil’s so-called geopolitical risk premium is back, reflecting the danger that international events could limit supplies, and it could stick around. Russia has shown few signs of backing off its war in Ukraine and Trump’s threat of sanctions against buyers of its crude could result in a significant drop in the amount of oil available on the global market.
• China and India are the largest buyers of Russian oil. Very little of it flows to other countries because of sanctions imposed shortly after its 2022 invasion of Ukraine.
• West Texas Intermediate, the U.S. benchmark, climbed close to $70 a barrel and Brent crude, the international standard, rose above $73 a barrel. Both are up more than 5% over the past five days, but remain at least 10% lower than a year ago.

What’s Next: If the U.S. imposes secondary sanctions or tariffs against China and India in connection with purchases of Russian oil, it could have a major impact on the market. Moscow could also retaliate by cutting off access to a major oil pipeline from Kazakhstan to a Black Sea port in Russia.

— Avi Salzman and Brian Swint

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Starbucks Shows Sales Weakness as CEO Cites Turnaround Momentum

Starbucks has been trying to overcome reduced foot traffic and pricing-power issues, and CEO Brian Niccol said the coffee retailer is making progress with his “Back to Starbucks” turnaround plan. Despite a dip in comparable-store sales in the just-ended quarter, the momentum is building, Niccol said.

• Starbucks reported second quarter earnings of 41 cents a share and revenue of $8.8 billion, which was up 3% from a year ago. Global same-store sales dropped 2% from a year ago, more than expectations. In the U.S., comparable-store sales dropped 2%, with a 4% slip in transactions.
• Niccols said that the company had fixed some issues and the turnaround was ahead of schedule. He also said the company plans to “unleash a wave of innovation” in 2026. In an earnings conference call, he said Starbucks is revamping its rewards program, which he said had strayed from its mission.
• Starbucks is also planning new menu items, including a 15-gram protein cold foam, coconut water-based tea, and customizable energy drink offerings. Starbucks will also experiment with gluten free products and nutritional goods, following customer feedback for more healthy products.
• While the third-quarter earnings are only half as much as a year ago, Starbucks noted it’s partly due to some one-time costs incurred during the quarter such as the Leadership Experience 2025—a conference in June involving 14,000 people—and some discrete tax expenses.

What’s Next: Starbucks faces the threat of the Trump administration’s 50% tariff on goods from Brazil, the world’s largest coffee producer. Starbucks’ North America annual costs of goods sold could increase by 0.5%, and impose a 0.8% drag to its adjusted earnings, TD Cohen analyst Andrew Charles wrote.

— Evie Liu and Mariapaula Gonzalez

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Dear Quentin,

I am having some serious issues with my health-insurance company denying claims. After a prostate-cancer diagnosis last year, I have been seeing a therapist for about a year. I continue to see him every other week in his office. Billing, copayments and insurance payments in 2024 were all fine.

I switched medical insurance in January 2025 under the Affordable Care Act. At that time, I called my new insurance company. They confirmed that this provider was in-network for me. My therapist made a copy of my medical card and also told me he was in-network. From the beginning of 2025 through May, he was having trouble submitting his bills for our sessions.

Since he was having trouble, I went to the service-provider section of the website and again found that he was in network. I even took some screenshots and emailed them to him. In June, he was able to get all the bills for January through May submitted. The insurance company denied any payment, saying he is out-of-network.

The insurance company is saying he is not in-network and that they will not pay anything because I haven’t met my out-of-network deductible. I am working with the insurance company on appealing, re-appealing etc., but I am starting to think it will never own its share of the medical bills, which is now approaching $2,000.

During that time, the insurance company sent him an offer of “expedited payment” if he signed off, including a section saying he was not in-network. He declined to accept that offer. He said he was OK with the amount that they offered, but he was not comfortable with the added sections and wording.

I think my therapist was confident that this was just a temporary clerical error, and my insurance would eventually recognize and agree that he is in-network. At each session, I paid him in cash the listed copayment amount for in-network services. At our last session, I said that if they keep denying the claim through July (which they have), he and I will need to discuss a new plan.

He looked a little shocked and said, “How insurance plays out is between me and the insurance company.” We don’t have any formal contract. He is an individual provider and not part of a group. He doesn’t have a billing department, and I don’t think he will escalate this to collections. I also don’t care about my credit score.

My question is a moral and financial one. If the new insurance company never covers anything, what is the appropriate way to handle the outstanding bills? Should I just write him a big check? I can afford to pay him in full, if that’s the right thing to do. How do I ethically handle this situation where the insurance company is being unethical to both of us?

What is the right thing to do? How do I handle the discussion with him?

— The Client

Read the Moneyist’s response here.

— Quentin Fottrell

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner