This pharmaceutical company continues to strengthen its investment thesis.
Artificial intelligence (AI) is not just a gimmick or a fad. Technology is changing people’s lives, reshaping businesses and entire industries, and according to some estimates, the sector will grow rapidly in the coming years, providing investors with ample opportunities to capitalize by investing in top AI companies. While many (perhaps most) of the leaders in the field are from the technology sector, companies in other sectors, including healthcare, are also looking to benefit from AI.
And one of the best AI healthcare stocks to buy is none other than Elie Lilly (LLY +0.04%). Here’s why the company is worth sticking around for the next two decades.
Image source: Getty Images.
Several AI initiatives
Eli Lilly is doubling down on AI, far more than most of its similarly sized peers in its industry. Here are three steps the company is taking.
First, in September, it announced the launch of TuneLab, an AI-based drug discovery platform, and its free availability to the youngest biotechnology companies to help accelerate drug discovery. Many small drugmakers don’t have the funds or data to train their own AI models, so TuneLab will be useful to them. In exchange, they will provide Eli Lilly with even more data to train its own models.
Then, in October, Eli Lilly announced its partnership with Nvidia build the world’s most powerful AI supercomputer pharmaceutical industry.
Finally, earlier this month, Eli Lilly announced the construction of an AI drug discovery lab in the San Francisco Bay Area, also in partnership with Nvidia. This lab will bring together Eli Lilly’s team of researchers and Nvidia engineers to use AI to accelerate drug discovery, a currently slow process.
If Eli Lilly can reduce R&D spending and research time spent on development blockbuster medicine through these efforts, the company and its shareholders will benefit in the long term.
Today’s change
(0.04%) $0.46
Current price
$1063.21
Key Data Points
Market capitalization
$1,000,000
Daily scope
$1053.71 -$1073.39
52 week range
$623.78 -$1133.95
Volume
36K
Average flight
3.5 million
Gross margin
83.03%
Dividend yield
0.56%
More reasons to buy
Eli Lilly’s AI initiatives look promising, but there are other, better reasons to hold onto the stock for the next 20 years. Over the next decade, the company is expected to ride the wave of the growing weight loss market, in which it is the leader. Even after losing patent exclusivity for some of its current growth drivers, Eli Lilly should be fine. The company has enhanced its product portfolio through internal development and acquisitions and offers promising products in a wide range of therapeutic areas, including neuroscience, immunology and oncology.
Over the next five years, the company is expected to make significant clinical progress in these areas, and when drugs such as Zepbound and Mounjaro lose patent exclusivity – which won’t be anytime soon – Eli Lilly will be ready.
In other words, Eli Lilly has strong innovation capabilities that allow it to exceed patent cliffs and competition. This is an important reason why the company can generate exceptional returns over the next two decades, especially since its AI efforts could help strengthen its already strong innovation capabilities.