Why this stock could be the Nvidia of Healthcare

In the past few years, artificial intelligence (AI) has become the world’s next megatrend. Until now, breakthroughs in generative AI have mainly revolved around the technology industry.

In particular, specialist in semiconductors Nvidia it is seen as the engine powering the AI ​​vehicle right now. Demand for the most powerful graphics processing units (GPUs) has been off the charts, and investors have encouraged the stock accordingly. That said, many use cases for AI remain largely overlooked by investors.

One of them is how AI is creating exciting new opportunities in the healthcare space. Among the companies leading the charge for AI in the medical world are gigantic Novo Nordisk and a relatively small Hippocratic AI, but I get it Eli Lilly (LLY 0.64%) as the greatest opportunity. Here’s why.

AI is a big opportunity in healthcare

AI can affect multiple areas across the healthcare spectrum, including service-oriented jobs such as nursing, software platforms, and hardware devices.

According to Precedence Research, the total global addressable market (TAM) for healthcare AI stands at approximately $26.7 billion today. This market is expected to grow at a compound annual rate of 37% from 2024 to 2034, reaching $614 billion. The US healthcare AI market alone is estimated to be worth $195 billion by 2034.

Image source: Getty Images

Which companies are bringing AI to healthcare?

One of the biggest challenges facing the healthcare industry right now is staffing. According to a report published by the multinational conglomerate PhilipsHospital understaffing is driving demand for more digital infrastructure in the form of automation solutions.

A start-up called Hippocratic AI is tackling the worker shortage head-on by developing healthcare agents based on large linguistic models (LLM). The company is essentially trying to bring AI to the world of healthcare, and it’s using Nvidia’s Avatar Cloud Engine to do so.

Another influential company helping to bridge the gap between healthcare and artificial intelligence is the Danish pharmaceutical powerhouse. Novo Nordiskthe developer of diabetes and obesity care treatments Ozempic and Wegovy.

Novo Nordisk is teaming up with French IT company Atos to develop a supercomputer that is meant to drive research in the biotech and pharmaceutical industries. It will be powered by GPUs from both Nvidia and Inteland will be stored in one of the Digital Realtyits data centers in Denmark.

Why do I see Lilly as the best opportunity?

While the projects from Novo Nordisk and Hippocratic AI are exciting, I think there are some risks around their ambitions. For starters, Hippocratic AI is still a start-up. It could be quite some time before the company makes significant progress in treating patients (assuming it does). In addition, I see Novo Nordisk’s supercomputing project as quite broad — making the investment prospects a little attractive.

Instead, Eli Lilly has identified a specific opportunity to pursue and is using AI to find solutions. Namely, it teamed up with ChatGPT developer OpenAI to help research to treat drug-resistant pathogens.

According to a report from MarketsandMarkets, the global market size for antimicrobial resistance will reach $7.7 billion by 2028. Furthermore, the World Bank estimates that the negative economic effects of antimicrobial resistance could exceed $1 trillion annually by in 2030.

Eli Lilly is already celebrated as one of the leading pharmaceutical companies in the world. Its portfolio includes many hits including Verzenio, Trulicity, Taltz, Jardiance, Mounjaro and Zepbound. What’s more, the company is poised to make a splash in the $31 billion Alzheimer’s disease market.

Not only is Eli Lilly focusing on a large and underserved area of ​​healthcare, but it’s teaming up with one of the biggest names in AI to meet this challenge. I suspect it will be years before Lilly makes a breakthrough in developing an effective new antimicrobial drug that works against bacteria that have become resistant to currently available treatments. Or, his efforts may ultimately fail.

However, if I had to pick a company that I see as most likely to succeed at the intersection of artificial intelligence and healthcare, I’d pick Eli Lilly. Given its long history in drug development and its commitment to innovation, I see some parallels between Nvidia’s signature in the tech sector and Eli Lilly’s influence in healthcare.

I believe it is laying the foundation for long-term success and will reach a new level of innovation beyond its medical laboratories. If investors are looking for a high-growth opportunity in healthcare AI, I see Eli Lilly as a top pick.