Nov. 30, 2022, will go down as a defining moment in modern history. That's the day OpenAI released ChatGPT to the masses. Just like that, euphoria about artificial intelligence (AI) took over the world.
One of the biggest beneficiaries of the AI boom has been semiconductor specialist Nvidia. If you had bought shares of Nvidia on the same day that ChatGPT was introduced, you would be up 583% right now. Some investors might think that returns of this magnitude are rare. I disagree. Stocks move 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 fuel long-term growth. Outside of AI, another growing narrative in the stock market surrounds the rise of glucagon-like peptide-1 (GLP-1) agonists for treating diabetes and obesity, such as Ozempic and Mounjaro.
Recently, I watched an interview with Roundhill Investments CEO Dave Mazza in which he referred to pharmaceutical leader Eli Lilly (LLY 2.72%) as the "Nvidia of the GLP-1 and weight loss space." I love this analogy, and I agree with his take. Below, I break down several reasons why investing in Eli Lilly right now could be similar to doing so with Nvidia during the dawn of the AI revolution.
NYSE: LLY
Key Data Points
The rise of weight loss medications
GLP-1 agonists have become popular among diabetes and obesity patients. Today, Lilly has two leading GLP-1 medicines, Mounjaro and Zepbound. These treatments are sending shock waves through the pharmaceutical sector and have propelled a new phase of growth for Lilly.
What's more, the company's own CEO, David Ricks, said the company hasn't even scratched the surface of its marketing and promotional efforts for its GLP-1 lineup. With that in mind, it's fair to think that Mounjaro and Zepbound have even better days ahead.
On top of that, Lilly continues to work hard to diversify beyond its injection-based weight loss treatments. The company's oral solution, orforglipron, is currently in phase 3 clinical trials.
Lastly, GLP-1 medicines are likely to witness more proliferation in the long run. Novo Nordisk's Wegovy was recently granted an expanded indication from the Food and Drug Administration (FDA) to treat cardiovascular disease in obesity patients. And Lilly has been exploring uses for treating obstructive sleep apnea.
Image source: Getty Images.
So much more to offer
Nvidia is best known for its chips called graphics processing units (GPUs). The company also has a large software business called CUDA that rarely gets spoken about. In a similar fashion, there is a lot more to Eli Lilly than its blockbuster GLP-1 drugs.
One of its other hit medicines is a cyclin-dependent kinase (CDK) inhibitor called Verzenio. It received FDA approval in 2017, and just last year it received an expanded indication to be used among certain cancer patients. This has broadened Verzenio's addressable market and sparked a new phase of accelerated growth for the drug.
Beyond its core portfolio, Lilly is set to enter another area in healthcare. In July, the company received FDA approval for its Alzheimer's disease candidate, donanemab. Similar to the GLP-1 market, treating Alzheimer's has enormous potential. Yet there is limited competition today outside of Biogen's and Eisai's Leqembi.
Besides its existing opportunities and robust pipeline of new medicines, Lilly is also at the forefront of technological innovation in healthcare.
Earlier this year, it entered into partnership with OpenAI. The goal is to bring the capabilities of generative AI to the healthcare space in an effort to discover breakthrough treatments for sophisticated (and perhaps neglected) illnesses.
An unstoppable force for the long haul
I see a lot of overlap between Nvidia and Lilly. Both companies are the biggest names in their respective industries, and each has a proven track record of developing best-in-class products and services.
Similar to the AI narrative, I think the GLP-1 story is just beginning. To me, it's likely that new chapters will include growing applications for these medicines, which further bolsters Lilly's market potential. When you add the company's entrance into the Alzheimer's realm and the long-run prospects that AI poses for healthcare, it's hard to overstate all of the growth catalysts Lilly has going for it.
I see it as a generational opportunity, and one that will continue minting significant gains for patient investors. I think now is a great time to buy shares of Eli Lilly and hold on for the long term.
