Prosper Junior Bakiny, The Motley Fool Thu, November 12, 2026 at 1:36 PM EST 5 min read LLY +0.18% NVDA -5.12% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Artificial intelligence (AI) is changing every sector, but the magnitude of its impact isn't identical across different industries. Perhaps many investors believe that the technology sector has been the most affected. However, Jensen Huang, the CEO of Nvidia (NASDAQ: NVDA) and one of the most authoritative voices in AI, believes that life sciences companies will be most affected by AI. If that's true, one corporation that seems particularly well-positioned to capitalize on AI is Eli Lilly (NYSE: LLY).
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Let's first discuss one of the problems that Eli Lilly and other drugmakers are trying to solve by using AI. Drug discovery and development is an expensive, lengthy, and risky activity. Most compounds that first enter the clinical phase never make it to the market.
The ones that do can take a decade to make it. On average, drugmakers spend about $2.6 billion before earning approval for a new medicine, according to some estimates.
And this problem has only worsened over the past few decades despite significant technological progress. AI could help pharmaceutical companies screen clinical compound candidates more quickly and advance the most promising to clinical trials. This might help reduce the time and money spent in the early stages of drug development.
Note that even with minor improvements, say a 5% to 10% reduction in the time and cost it takes to develop drugs, the total impact will be massive, particularly for a company like Eli Lilly, which boasts many clinical trial candidates across various phases of development.
The company built LillyPod, the most powerful supercomputer in the pharmaceutical industry, to capitalize on the opportunities AI presents in drug discovery. Now, AI can't do everything. New drugs still need to be tested in rigorous clinical trials. That takes time and money.
Even so, between accelerating drug discovery and helping optimize clinical trial patient recruitment, design, and data analysis, the technology could be a game changer for Eli Lilly. There is another thing to consider. Eli Lilly's chief scientific and product officer, Daniel Skovronsky, has pointed out that the quality of AI models used in drug discovery largely depends on the data used to train them.
Eli Lilly possesses vast amounts of data on clinical trial successes and failures, particularly in the diabetes and weight-loss markets, which could give it a significant competitive edge that will be hard for companies lacking such data to replicate.
Do Eli Lilly's investments in AI make the stock a buy? Not in my view. The impact of AI on the company's business may be real, or at least it might become so over the next few years. But many other pharmaceutical giants are pouring money into AI. The list includes Novo Nordisk (NYSE: NVO), AbbVie (NYSE: ABBV), and Bristol Myers Squibb (NYSE: BMY).
These are leading drugmakers with access to massive internal data that can be used to train their AI models. Novo has been a leader in diabetes for decades, AbbVie is particularly strong in immunology, and Bristol Myers has historically been a leader in oncology. Eli Lilly's AI-related work alone does not give it a significant enough edge over its peers. But there are other reasons to buy the stock.
Eli Lilly is posting excellent financial results. In the third quarter, the company's revenue increased by 39% year over year to $24.4 billion. Eli Lilly's diabetes and weight loss medicines, Mounjaro and Zepbound, respectively, are doing most of the heavy lifting, but the company's drugs in other areas are also making significant headway.
We can also turn to Eli Lilly's pipeline, which features several promising products across weight loss -- a fast-growing area -- oncology, immunology, neuroscience, and more. Even as competition in the anti-obesity market intensifies, Eli Lilly should successfully diversify its approved product lineup and continue performing well. Finally, Eli Lilly is a solid dividend stock, despite its low forward yield of 0.5%.
The company generates significant free cash flow and has increased its dividends by 239% over the past 10 years. Growth- and income-oriented investors can find what they are looking for with Eli Lilly.
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Prosper Junior Bakiny has positions in Eli Lilly, Novo Nordisk, and Nvidia. The Motley Fool has positions in and recommends AbbVie, Bristol Myers Squibb, Eli Lilly, Novo Nordisk, and Nvidia. The Motley Fool has a disclosure policy.
Nvidia CEO Jensen Huang Says AI's 'Most Profound Impact' Will Be in Life Sciences -- and Eli Lilly Is Already Building on It was originally published by The Motley Fool
