Nvidia (NVDA 0.80%) is a tough one to beat when it comes to share-price performance. The technology giant has seen its shares soar 2,500% over the past five years, and this year, it's heading for a 118% increase.
There's a good reason for this incredible run. Nvidia dominates one of today's biggest growth areas -- the artificial intelligence (AI) chip market -- holding an 80% share. As a result, Nvidia's earnings have been climbing in the triple digits to new records, quarter after quarter.
Though Nvidia makes a great buy, this stock isn't the only potential winner for your portfolio in the second half of 2024. My prediction is that a biotech stock operating in a particularly dynamic field will outperform the tech giant during this period. (It already beat Nvidia's performance in the first half.)
This biotech has fallen behind over the past six months, but major advancements in its pipeline may give the stock the boost it needs to jump ahead, once again. Read on to find out more.
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The billion-dollar obesity drug market
Which biotech company are we talking about? Viking Therapeutics (VKTX 5.57%), a player that's making significant progress in the obesity drug market, which Goldman Sachs Research predicts may reach $100 billion by the end of the decade. Viking is developing candidates known as dual GIP/GLP-1 receptor agonists, much like the already commercialized drugs of Eli Lilly and Novo Nordisk.
These types of drugs work by acting on hormones involved in the digestion process, controlling blood sugar levels and appetite. They've been immensely popular, leading to shortages in the market and pushing Lilly and Novo Nordisk to expand their production capabilities.
Viking's candidates have produced promising data in clinical trials. For example, the phase 2 trial of injectable candidate VK2735 met its primary endpoint and all secondary endpoints, with patients achieving as much as a 15% reduction in body weight after 13 weeks. And in the phase 1 trial of the tablet version of the candidate, patients showed as much as 5.3% reduction in weight in just 28 days. The announcement of these results earlier in the year wowed investors, prompting the stock to take off.
In the second half of 2024, Viking is planning an end-of-phase 2 meeting with the U.S. Food and Drug Administration for VK2735. Following that, it aims to launch a phase 3 trial. The company also expects to start a phase 2 trial for the oral version later this year. This progression may offer the stock fuel to rocket higher in the coming months.
NASDAQ: VKTX
Key Data Points
A potential takeover target?
Investors also have speculated that a bigger biotech or pharma company may consider Viking as a takeover target to get in on the booming weight loss drug market. Further speculation or concrete developments here also could keep Viking stock flying high in the later months of the year.
Meanwhile, Nvidia could advance, as well, especially considering the company's upcoming launch of its new architecture Blackwell, its most powerful chip ever. But Viking's share performance following pipeline developments has proven to be better than that of Nvidia following good news. When Viking reported positive VK2735 data earlier this year, the stock surged more than 120% in one trading session. Nvidia, after announcing the launch of a stock split -- news investors generally welcome -- climbed about 9% in one session.
Any positive news from Viking could result in outsized gains. With programs advancing in the coming months, more news could be on the horizon.
Long-term investing
Of course, this is just short-term performance. Before buying a stock, it's important to consider its long-term potential because holding on to solid companies for at least five years is the way to truly boost your portfolio.
I expect Eli Lilly to dominate the weight loss drug market, thanks to its position today and candidates in the pipeline. However, considering the great demand in this market, Viking could carve out share down the road -- or potentially join forces with another company.
Viking comes with some risk since it's an up-and-coming player and not an established one like Eli Lilly. But it also carries significant growth potential if pipeline programs continue to advance successfully. That's why this stock -- which I predict will beat Nvidia in the second half -- also may score a long-term win for investors.
