Jim Cramer sees pockets of 'turmoil' in the market — plus, the latest on Nvidia's plans for China

Tuesday's market saw significant sector-specific shifts, with Novo Nordisk shares plummeting over 20% after slashing its 2025 sales outlook for GLP-1 drugs, dragging down peers like Eli Lilly. In contrast, Nvidia hit a 52-week high on news of a substantial H20 chip order from TSMC for the Chinese market, benefiting from a recent ban reversal and lifting other AI chipmakers. Meanwhile, Starbucks prepared to report Q3 FY25 earnings, with investor attention on its turnaround progress and China operations amid tempered expectations.

Analysis

The market is exhibiting significant internal divergence, masked by modest index-level movements. A sharp downturn in the healthcare sector is being driven by Novo Nordisk (NVO), whose shares plunged over 20% after the company substantially cut its 2025 sales outlook for its key GLP-1 drugs, Wegovy and Ozempic. This negative guidance created a contagion effect, pulling down peer Eli Lilly (LLY) by 4.3% and prompting pre-emptive risk mitigation ahead of its own earnings. In stark contrast, the artificial intelligence semiconductor space is showing pronounced strength. Nvidia (NVDA) reached a 52-week high following a report of a 300,000-unit order for its China-specific H20 chips, a development enabled by the recent reversal of a U.S. sales ban. This has lifted sentiment for the broader AI ecosystem, including chipmakers AMD and Broadcom. Meanwhile, investors are cautiously positioned ahead of Starbucks' (SBUX) earnings, with expectations tempered for the coffee giant's turnaround progress and China operations, reflecting the stock's market underperformance this year.

Key Decisions for Investors

• Novo Nordisk's severe guidance cut introduces significant forward-looking risk to the GLP-1 drug market, warranting a re-evaluation of growth assumptions for the entire cohort, including Eli Lilly, ahead of its upcoming earnings.
• The resumption of Nvidia's H20 chip sales to China is a material positive catalyst; investors should monitor geopolitical trade policies as a key performance driver for NVDA and its supply chain partners like Taiwan Semiconductor.
• Given explicitly low expectations for Starbucks' earnings report, investors should focus on any incremental improvements in its turnaround strategy or China business, as even modest positive signs could influence the stock's trajectory.
• The stark performance divergence between healthcare and semiconductor sectors necessitates a targeted investment approach, as broad market exposure may conceal significant underlying weakness or strength in specific industries.