Some analysts are worried that the artificial intelligence (AI) bubble will burst soon, causing a market crash. Whether or not there's something to these fears, it's a good idea for investors to buy shares of companies that can survive downturns and thrive long after. One stock I'd bet on right now is Eli Lilly (LLY 2.35%). Here's why.
The leader in a fast-growing market
Eli Lilly has historically been one of the largest players in the diabetes medicine market, and it remains so today. However, over the past five years, the stock has crushed broader equities thanks to its work in the weight-loss drug market. Lilly's Zepbound (tirzepatide) is currently the leader in this space. Tirzepatide, the compound also marketed as Mounjaro for diabetes, became the world's best-selling drug last year, even though it was only its third full year on the market.
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Eli Lilly has been posting outstanding financial results. How would the company fare in a market crash? Its shares would likely be dragged down, but its financial results should remain strong. Whether a downturn results from the AI bubble bursting or a recession, neither should significantly impact demand for its medicines, especially in the diabetes market. Even in weight loss, thanks to Lilly's breakthroughs and a large and growing population of patients with obesity (and the health conditions linked to it), analysts predict that this space will expand significantly over the next decade or so.
And beyond Zepbound, Eli Lilly should launch newer anti-obesity products over the next couple of years to strengthen its position. One of them is orforglipron, an oral GLP-1 medicine that could hit the market this year. Another one, retatrutide, looks incredibly promising based on the phase 3 data Lilly has revealed so far. The company's revenue and earnings should continue growing at a good clip, and a market crash wouldn't change that.
NYSE: LLY
Key Data Points
Beyond diabetes and weight loss
Although Eli Lilly is currently relying on its core therapeutic areas to drive growth, the company has products and pipeline candidates across many other areas, including oncology, immunology, and neuroscience. Lilly is also quietly making moves in AI. Among other efforts in this field, it's building an AI supercomputer that could help speed up drug development.
Is there likely to be a market crash in the next five to 10 years, as well as steeper competition in the anti-obesity space? Yes, absolutely. However, the company's innovative qualities and diversified pipeline should allow it to perform well over the long run. The stock is also an excellent pick for dividend seekers, having increased its payouts by 103.5% over the past five years.
All these factors make a strong bullish case for Eli Lilly. Even if its shares dip during a market crash, you may find it worth sticking with the company long-term.
