Artificial intelligence has already made its mark in commercial industries, and there’s a good argument to be made that AI is most impactful in the drug discovery marketplace:
— Goldman Sachs estimates that AI drug discovery and breakthroughs like gene editing will add 0.5% to 2.5% to the U.S. gross domestic product.
— McKinsey & Co. follows suit, noting AI could generate 30% efficiency gains and cost savings in the pharmaceutical sector and trigger financial gains of up to $110 billion annually.
— According to the Deloitte Center for Health Solutions, 75% of health care organizations are using or planning to incorporate generative AI.
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Drug discovery companies are already deploying advanced AI technologies and algorithms to boost drug research, design and testing and are using the technology to streamline supply chain operations to get products to the market faster.
Drug researchers also find that AI leads to more robust and decisive drug development decisions, which gets better products to the patients who need them faster than ever.
With the sky seemingly the limit for AI in drug discovery, which industry names stand to gain from a stock market point of view? Here are eight intriguing possibilities for investors to consider in 2025:
— Bristol-Myers Squibb Co. (ticker: BMY)
— Eli Lilly and Co. (LLY)
— AbCellera Biologics Inc. (ABCL)
— Super Micro Computer Inc. (SMCI)
— Novartis AG (NVS)
— Schrodinger Inc. (SDGR)
— Pfizer Inc. (PFE)
— Absci Corp. (ABSI)
Bristol-Myers Squibb Co. (BMY)
Bristol-Myers Squibb shares are down year to date, though BMY pays a substantial dividend yield of 4.2%. The stock is struggling primarily due to issues common to drug developers, as BMY’s skin cancer drug Opdualag recently disappointed in melanoma cancer testing. Additionally, the company’s 2025 performance outlook underwhelmed analysts as generic drug competitors rack up steady market gains.
BMY can make up ground with AI, however, as the company says the technology is “at the forefront” of its drug discovery and development. “Integrating AI across various functions, we enhance research and development, human resources, finance and speed to market,” the company says on its website. “Such customized AI resources as our in-house ChatGPT and groundbreaking MyGrowth HR platform drive meaningful advancements in health care and in the careers of the professionals of BMS.”
Eli Lilly and Co. (LLY)
Eli Lilly is up about 10% year to date, far surpassing the S&P 500’s performance. In the fourth quarter of 2024, the company’s obesity drug Zepbound and type 2 diabetes drug Mounjaro raked in $1.9 billion and $3.5 billion, respectively. Those figures, however, clocked in lower than analysts expected, which could be a moderate red flag going forward.
According to a recent Purdue University study, the company “has made some of the most substantial investments in artificial intelligence innovation to accelerate research and development.” Ramesh Durvasula, Eli Lilly senior vice president of R&D IT, told Purdue researchers that Lilly is “using AI not just in augmenting human capabilities, but in drug discovery, clinical trials, process optimization and data integration.”
On Feb. 13, Citi’s Geoff Meacham held his “buy” rating on LLY with a target price of $1,190. LLY closed at $852.35 on March 25.
AbCellera Biologics Inc. (ABCL)
This 13-year-old Vancouver, British Columbia-based therapeutic antibody developer’s stock is down 44.8% over the past year as of March 25, and lately there’s been a pattern of choppy market performance. Still, the company is in a strong financial position, with $780 million in cash and only $217 million in long-term debt, and collaborative partners include heavyweights like Eli Lilly.
The company is also poised for AI growth, with AI and machine learning allowing companies like ABCL to boost molecule discovery-to-therapeutic market products faster than ever. ABCL is a bio-fan favorite, so opportunity-minded investors may want to buy in soon before the price rebounds.
Super Micro Computer Inc. (SMCI)
This information technology solutions provider is coming off a big upswing, with the stock returning 18.4% over the past three months and 33.3% year to date as of March 25.
The company expects the good times to continue rolling, issuing an aggressive $40 billion revenue target for 2026 and anticipating top-tier results from its relationship with Nvidia Corp. (NVDA), through which its AI server operation helped produce NVDA’s Blackwell graphics processing unit.
San Jose, California-based SMCI faces some regulatory hurdles and has had to pay the U.S. Securities and Exchange Commission $17.5 million for serious accounting issues in 2020. If you can stomach some of the company’s paperwork snafus, Super Micro certainly looks like its flight path is a long one.
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Novartis AG (NVS)
Novartis, the Basel, Switzerland-based health care products company, is off to a strong start in 2025. The firm’s stock price is up 17.4% this year, and it offers a generous dividend yield of 3.5%.
The company made news on Feb. 11 with its $3.1 billion acquisition of Boston-based Anthos Therapeutics (with only $925 million required upfront). The transaction, which is expected to close in the first half of 2025, connects Novartis with Anthos’ late-stage abelacimab stroke and embolism prevention medicine, which is getting promising reviews from analysts and medical researchers. Wall Street likes the deal, with both Goldman Sachs and Deutsche Bank analysts issuing “hold” calls on the stock.
Last September, Novartis announced a breakthrough partnership with Generate: Biomedicines, which uses AI to develop new medicines. The deal calls for Generate to develop protein therapeutics across multiple disease areas. Novartis has also established an AI innovation lab to “empower associates to use AI across our business.”
Schrodinger Inc. (SDGR)
With a solid 11.2% year-to-date gain as of March 25, this New York-based leader in chemical simulation software is raising eyebrows on Wall Street. The stock got a big pop in November with its three-year software deal with Novartis, valued at up $2.5 billion. Under the deal terms, Schrodinger will deploy its AI-powered physics-enhanced software platform to spur drug development and curb production costs for Novartis.
SDGR is another Wall Street favorite, with 73% of the 11 analysts tracking the stock issuing “buy” calls in mid-February, with 27% in “hold” mode and no “sell” recommendations. A consensus of 12-month price targets on the TipRanks forecaster reflects a potential 50% upside for SDGR.
Pfizer Inc. (PFE)
Pfizer has had a tough time lately, with its share price down 2.1% year to date. Pfizer’s share performance has dropped significantly from 2022 highs, when the company’s COVID-19 vaccine pumped up its revenues.
The New York-based global biopharmaceutical powerhouse got some good news on Feb. 12, as it gained U.S. Federal Drug Administration approval for its lymphoma-fighting drug Adcetris. The company also offers a sky-high 6.7% dividend yield, and its purchase of cancer specialist firm Seagen sets Pfizer up nicely in the profitable oncology corner of the biotech industry.
Pfizer has been leveraging AI technology since 2014 and continues to make significant strides. In January, Pfizer expanded its ongoing partnership with PostEra, which specializes in AI-based medical chemistry solutions. With the deal extension, Pfizer will pay PostEra $350 million to use its software platform to develop new small molecules and design new antibody-drug conjugates.
Absci Corp. (ABSI)
Absci started the year on a high note, announcing in January an AI deal with Owkin to use technology to develop novel therapeutics, particularly in the immunology and inflammation fields. The agreement combines Absci’s generative AI drug creation platform and its antibody design models with Owkin’s predictive AI models to cut research and development times and get therapeutics out to the market faster and with less red tape.
ABSI shares are up 17.2% in 2025 and have gained the nod of multiple sector analysts, including H.C. Wainwright and Needham. Interestingly, fund supernova Cathie Wood got in early on ABSI shares in late 2024, snapping up $1.9 million shares of the stock at $2.62 per share. The stock closed at $3.07 on March 25.
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