Nov. 30, 2022, will go down as a defining second in trendy historical past. That is the day OpenAI launched ChatGPT to the plenty. Similar to that, euphoria about synthetic intelligence (AI) took over the world.
One of many greatest beneficiaries of the AI increase has been semiconductor specialist Nvidia. In case you had purchased shares of Nvidia on the identical day that ChatGPT was launched, you’ll be up 583% proper now. Some buyers would possibly assume that returns of this magnitude are uncommon. I disagree. Shares transfer up for all kinds of causes, even essentially the most unconventional ones.
What’s uncommon, nonetheless, is discovering a high quality firm with reliable catalysts that may gas long-term development. Outdoors of AI, one other rising narrative within the inventory market surrounds the rise of glucagon-like peptide-1 (GLP-1) agonists for treating diabetes and weight problems, similar to Ozempic and Mounjaro.
Just lately, I watched an interview with Roundhill Investments CEO Dave Mazza wherein he referred to pharmaceutical chief Eli Lilly (NYSE: LLY) because the “Nvidia of the GLP-1 and weight reduction house.” I really like this analogy, and I agree along with his take. Under, I break down a number of explanation why investing in Eli Lilly proper now may very well be just like doing so with Nvidia through the daybreak of the AI revolution.
The rise of weight reduction drugs
GLP-1 agonists have turn into in style amongst diabetes and weight problems sufferers. Right now, Lilly has two main GLP-1 medicines, Mounjaro and Zepbound. These remedies are sending shock waves via the pharmaceutical sector and have propelled a brand new section of development for Lilly.
What’s extra, the corporate’s personal CEO, David Ricks, mentioned the corporate hasn’t even scratched the floor of its advertising and marketing and promotional efforts for its GLP-1 lineup. With that in thoughts, it is honest to assume that Mounjaro and Zepbound have even higher days forward.
On high of that, Lilly continues to work arduous to diversify past its injection-based weight reduction remedies. The corporate’s oral answer, orforglipron, is presently in section 3 scientific trials.
Lastly, GLP-1 medicines are prone to witness extra proliferation in the long term. Novo Nordisk‘s Wegovy was just lately granted an expanded indication from the Meals and Drug Administration (FDA) to deal with heart problems in weight problems sufferers. And Lilly has been exploring makes use of for treating obstructive sleep apnea.
A lot extra to supply
Nvidia is greatest recognized for its chips referred to as graphics processing items (GPUs). The corporate additionally has a big software program enterprise referred to as CUDA that hardly ever will get spoken about. In a similar way, there’s much more to Eli Lilly than its blockbuster GLP-1 medication.
One among its different hit medicines is a cyclin-dependent kinase (CDK) inhibitor referred to as Verzenio. It acquired FDA approval in 2017, and simply final yr it acquired an expanded indication for use amongst sure most cancers sufferers. This has broadened Verzenio’s addressable market and sparked a brand new section of accelerated development for the drug.
Past its core portfolio, Lilly is about to enter one other space in healthcare. In July, the corporate acquired FDA approval for its Alzheimer’s illness candidate, donanemab. Just like the GLP-1 market, treating Alzheimer’s has monumental potential. But there’s restricted competitors right this moment outdoors of Biogen‘s and Eisai‘s Leqembi.
Moreover its current alternatives and sturdy pipeline of latest medicines, Lilly can also be on the forefront of technological innovation in healthcare.
Earlier this yr, it entered into partnership with OpenAI. The purpose is to carry the capabilities of generative AI to the healthcare house in an effort to find breakthrough remedies for classy (and maybe uncared for) sicknesses.
An unstoppable power for the lengthy haul
I see plenty of overlap between Nvidia and Lilly. Each firms are the largest names of their respective industries, and every has a confirmed monitor report of creating best-in-class services and products.
Just like the AI narrative, I believe the GLP-1 story is simply starting. To me, it is seemingly that new chapters will embrace rising purposes for these medicines, which additional bolsters Lilly’s market potential. While you add the corporate’s entrance into the Alzheimer’s realm and the long-run prospects that AI poses for healthcare, it is arduous to overstate the entire development catalysts Lilly has going for it.
I see it as a generational alternative, and one that may proceed minting vital beneficial properties for affected person buyers. I believe now is a good time to purchase shares of Eli Lilly and maintain on for the long run.
Do you have to make investments $1,000 in Eli Lilly proper now?
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Adam Spatacco has positions in Eli Lilly, Novo Nordisk, and Nvidia. The Motley Idiot has positions in and recommends Nvidia. The Motley Idiot recommends Biogen and Novo Nordisk. The Motley Idiot has a disclosure coverage.
Investing in This Healthcare Inventory Might Be Like Catching Nvidia on the Daybreak of the AI Increase was initially printed by The Motley Idiot