This Is Nvidia CEO Jensen Huang's Favorite Biotech Stock -- and You've Probably Never Heard of It

Generate Biomedicines (NASDAQ: GENB) is one of the top five largest holdings of Nvidia (NASDAQ: NVDA), run by CEO Jensen Huang. Let that sink in for a moment. The largest publicly traded company by market capitalization has roughly $10.4 million invested in a clinical-stage biotech company. Nvidia has invested in Generate through its venture arm, NVentures.

That says a lot about the possibilities for Generate, which went public this past February with an initial public offering (IPO). Its shares are up more than 12% so far this year. The company's artificial intelligence (AI) platform, called the Generate Platform, is designed to accelerate the process and improve the success rate of creating new therapeutics.

Here are two reasons to buy Generate Biomedicines stock, and one reason to be cautious.

Image source: Getty Images.

The uniqueness of its platform

Unlike traditional biotechs that screen existing compound libraries or modify natural proteins, Generate uses proprietary machine-learning architectures, such as its Chroma model, to engineer novel, tailor-made protein therapeutics from scratch. This platform approach targets disease pathways and undruggable proteins that legacy drug discovery methods struggle to reach.

Generate is not just a theoretical software play; it is actively proving its computational models in human trials. Lead candidate GB-0895, an anti-thymic stromal lymphopoietin antibody, has reached phase 3 trials for severe asthma, alongside an early-stage trial in COPD. Additionally, strategic backing and co-development deals with Amgen and Nvidia provide strong institutional validation.

Its pipeline extends well past GB-0895

Because Generate operates as an automated, reproducible drug design engine rather than a single-drug developer, it can systematically generate dozens of clinical candidates across multiple therapeutic areas. This broad pipeline spreads clinical risk across numerous targets rather than tying the stock's valuation to a single binary trial result.

Oncology medicine GB-4362 is a monoclonal antibody designed to neutralize monomethyl auristatin E (MMAE) payload toxicity. It aims to broaden the therapeutic window of MMAE-based antibody-drug conjugates (ADCs) by reducing off-target side effects, such as peripheral neuropathy, without sacrificing anti-tumor efficacy.

Cell therapy GB-5267 is an IL-18 armored CAR-T cell therapy targeting MUC16 for platinum-resistant ovarian cancer. Engineered for superior persistence and enhanced tumor-killing, it aims to overcome barriers in the traditional solid tumor microenvironment.

The company has additional pre-clinical internal programs leveraging next-gen ADC technologies and modular protein engineering across immunology and oncology.

One reason to be wary

While AI dramatically accelerates early-stage discovery and candidate selection, it cannot bypass the unpredictability of human biology. The vast majority of biotech failure rates occur during phase 2 and phase 3 trials due to unforeseen toxicity or lack of efficacy in complex human systems.

Given that clinical-stage biotechs require substantial capital to fund expensive trials, Generate Biomedicines faces ongoing cash burn and potential dilution before achieving commercial profitability. As a clinical-stage company, it has limited revenue. In the first quarter, it reported $7.2 million in revenue from its collaborations with Amgen and Nvidia. It had a net loss of $61.7 million for the quarter, compared with $44.3 million for the same period a year ago.

As of the first quarter, it reported it had $516.6 million in cash, enough to last roughly two years at its current burn rate.

James Halley has positions in Nvidia. The Motley Fool has positions in and recommends Amgen and Nvidia. The Motley Fool has a disclosure policy.