November 30, 2022 will go down in history as a defining moment in modern history. That was the day OpenAI released ChatGPT to the general public. Thus, euphoria about artificial intelligence (AI) took over the world.
One of the biggest beneficiaries of the AI boom has been the semiconductor specialist. NvidiaIf you had bought Nvidia stock on the day ChatGPT was introduced, you would be up 583% right now. Some investors might think that returns of this magnitude are rare. I disagree. Stocks go up for all sorts of reasons, even the most unconventional ones.
What is rare, however, is finding a quality company with legitimate catalysts that can drive long-term growth. Outside of AI, another booming narrative in the stock market revolves around the rise of glucagon-like peptide-1 (GLP-1) agonists for the treatment of diabetes and obesity, such as Ozempic and Mounjaro.
I recently watched an interview with Roundhill Investments CEO Dave Mazza in which he discussed the pharmaceutical leader Eli Lilly (NYSE: LLY) as the “Nvidia of GLP-1 and weight loss.” I love this analogy and agree with his sentiment. Below, I break down several reasons why investing in Eli Lilly right now could be similar to investing in Nvidia during the dawn of the AI revolution.
The rise of weight loss drugs
GLP-1 agonists have become popular among patients with diabetes and obesity. Lilly currently has two leading anti-GLP-1 drugs, Mounjaro and Zepbound. These treatments are revolutionizing the pharmaceutical industry and have fueled a new phase of growth for Lilly.
What’s more, the company’s own CEO, David Ricks, said that the company hasn’t even begun marketing and promoting its GLP-1 line. With this in mind, it’s fair to think that even better days lie ahead for Mounjaro and Zepbound.
Lilly is also working hard to diversify beyond its injectable weight-loss treatments. The company’s oral solution, orforglipron, is currently in Phase 3 clinical trials.
Finally, GLP-1 drugs are likely to experience increased proliferation in the long term. New NordiskThe Food and Drug Administration recently granted Wegovy an expanded indication to treat cardiovascular disease in obese patients. And Lilly has been exploring uses to treat obstructive sleep apnea.
Much more to offer
Nvidia is best known for its chips called graphics processing units (GPUs). The company also has a huge software business called CUDA that is rarely talked about. Similarly, Eli Lilly is about much more than its blockbuster GLP-1 drugs.
Another of its blockbuster drugs is a cyclin-dependent kinase (CDK) inhibitor called Verzenio. It received FDA approval in 2017 and, last year, received an expanded indication for use in certain cancer patients. This has expanded Verzenio’s potential market and triggered a new phase of accelerated growth for the drug.
In addition to its core portfolio, Lilly is set to enter another area of healthcare. In July, the company received FDA approval for its Alzheimer’s disease candidate, donanemab. Like the GLP-1 market, Alzheimer’s treatment has enormous potential. However, there is limited competition outside of the market today. Biogen‘sand EisaiIt’s Leqembi.
In addition to its existing opportunities and robust pipeline of new medicines, Lilly is also at the forefront of technological innovation in healthcare.
Earlier this year, it partnered with OpenAI. The goal is to bring generative AI capabilities to the healthcare realm in an effort to discover innovative treatments for sophisticated (and perhaps neglected) diseases.
An unstoppable force in the long term
I see a lot of similarities between Nvidia and Lilly. Both companies are top performers in their respective industries and each has a proven track record of developing world-class products and services.
As with AI, I believe the GLP-1 story is just beginning. In my view, new chapters are likely to include ever-growing applications for these drugs, further bolstering Lilly’s market potential. Add to this the company’s entry into Alzheimer’s and the long-term prospects that AI holds for healthcare, and it’s hard to overstate all the growth catalysts Lilly has in its favor.
I see this as a generational opportunity that will continue to generate significant gains for patient investors. I think now is a good time to buy Eli Lilly stock and hold it for the long term.
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Adam Spatacco has positions in Eli Lilly, Novo Nordisk and Nvidia. The Motley Fool has positions in Nvidia and recommends it. The Motley Fool recommends Biogen and Novo Nordisk. The Motley Fool has a disclosure policy.
Investing in this healthcare stock could be like watching Nvidia at the dawn of the artificial intelligence boom. It was originally published by The Motley Fool