The Next Big AI Winner Might Not Be a Tech Company
For years, artificial intelligence (AI) has been closely associated with the big tech companies. But it is becoming a core competitive advantage across industries. The healthcare and biotech sector, in particular, is using AI to fundamentally transform how products are discovered, developed, and delivered. One classic example of that is Eli Lilly (LLY), a global pharmaceutical company that develops, manufactures, and sells medicines in diabetes & obesity, oncology, immunology, and neuroscience.
Valued at $901.8 billion, LLY stock has fallen 12% year-to-date (YTD), compared to the S&P 500 Index’s ($SPX) dip of 4%.
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In the biotech industry, bringing a drug to the market can take over a decade. AI has the potential to identify viable drug candidates faster, optimize clinical trials, and reduce failure rates. Lilly is aggressively investing in AI as part of its innovation strategy. Recently, it announced a collaboration with Nvidia (NVDA) to create a co-innovation AI lab that will combine modern computing with scientific expertise to expedite drug discovery.
Thanks to AI-driven innovation, Lilly currently has 36 active Phase 3 programs and has recently started 14 new late-stage trials, making it one of the largest clinical pipelines in its history. It has two promising obesity and metabolic drugs, like Orforglipron and Retatrutide, in late-stage trials that have shown positive clinical results. Lilly is backing its ambitions with massive capital investment. Since 2020, it has allocated more than $55 billion to manufacturing expansion. New facilities in the U.S. and Europe have led to a significant increase in production capacity, allowing the company to manufacture 1.8 times more incretin doses in 2025 than in 2024. The company also recently announced plans to acquire Centessa Pharmaceuticals (CNTA) for about $6.3 billion. This acquisition will bring a promising pipeline of orexin receptor 2 (OX2R) agonists targeting sleep-wake disorders, including cleminorexton, which has demonstrated high potential in treating narcolepsy and associated conditions.
On April 1, LLY stock surged 3.7% after the U.S. Food and Drug Administration approved Foundayo (orforglipron), its once-daily oral obesity treatment. The drug is designed to expand access to obesity care, with pricing starting as low as $25 per month for commercially insured patients and $149 for self-pay. Foundayo’s convenience as a pill (with no meal or water limitations) could significantly increase adoption. This will strengthen Lilly’s position in the fast-rising obesity market. In 2025, Lilly delivered a standout performance, with revenue rising 45% year-over-year (YoY) to $65.2 billion, driven by strong global demand and volume growth across major markets, including the U.S., Europe, Japan, and China. Lilly maintained a high gross margin of 83.2% and increased adjusted net earnings by 96% to $22.95 per share.
Looking ahead, the company expects 2026 revenue between $80 billion and $83 billion, implying roughly 25% growth at the midpoint, with EPS projected to rise by 49% at the midpoint to $33.50 to $35 per share. In healthcare, AI is expediting drug discovery, improving patient outcomes, and creating totally new markets. Companies like Eli Lilly are proving that when AI is paired with experience, capital, and execution, it can generate a significant competitive advantage. Analysts expect Lilly’s earnings to increase by 43.2% in 2026, followed by 21.3% in 2027.
On Wall Street, Eli Lilly has earned an overall “Strong Buy” rating. Of the 30 analysts who cover the stock, 23 rate it a “Strong Buy,” three rate it a “Moderate Buy,” and four recommend a “Hold.” The average analyst price target of $1,238.46 suggests a 30% increase from current levels. Furthermore, the Street-high estimate of $1,500 implies that the stock could rally by up to 57% over the next year.
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On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
