Forget Recursion Pharmaceuticals Stock. This Is a Much Better Buy.

Recursion Pharmaceuticals (NASDAQ: RXRX), a small-cap biotech company, has one claim to fame: It currently owns the largest artificial intelligence (AI) supercomputer in the pharmaceutical industry, which it is using to help accelerate the slow process of drug development. If successful, Recursion Pharmaceuticals could deliver outstanding returns to investors. However, there is arguably a far better -- and safer -- way for investors to profit from the potential revolution AI could bring in drug discovery, and that's to invest in Eli Lilly (NYSE: LLY).

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The problem with Recursion Pharmaceuticals

Recursion Pharmaceuticals utilizes a proprietary operating system (OS) and an AI-powered algorithm that continuously runs virtual experiments, testing compounds against a library of human genes to predict which ones are most likely to be effective in treating specific diseases. The biotech hopes that its strategy will help improve the success rate of compounds that enter human clinical trials, the majority of which never reach the market.

Recursion Pharmaceuticals also argues that it could reduce the time from discovery to the start of clinical trials. All of this would lead to less time and money spent on developing therapies that are just as effective as those of its peers. However, Recursion Pharmaceuticals has yet to demonstrate that it can deliver on its claims. It doesn't have a single product on the market. None in phase 3 studies either.

Despite its partnerships with several pharmaceutical leaders, including Merck and Roche, its research has yielded mostly empty results so far. At this point, the stock looks very risky -- just as pre-commercial biotech companies tend to be.

Why Eli Lilly is a better option

Eli Lilly is a well-established pharmaceutical company with a portfolio of products that consistently generate revenue and earnings. The company's top line has been growing at a good clip in recent quarters, and, as the leader in the weight loss market, its outlook for the next five years (or so) appears attractive.

Here's the relevance to Recursion Pharmaceuticals. Eli Lilly recently announced that it would build an AI supercomputer, which, once complete, will be the largest in the pharmaceutical industry, overtaking Recursion's. Eli Lilly will seek to use the same approach as its much smaller peer. The pharmaceutical giant has an advantage: It possesses a wealth of data on past clinical trial successes and failures that it can utilize to train its AI drug discovery models.

That could grant it a leg up over smaller players in this niche. AI may indeed hold the power to revolutionize the way we develop drugs, and investing in Eli Lilly is a far safer way to profit from that, considering its strong underlying business, consistent financial results, and secure prospects. Recursion Pharmaceuticals may have more upside potential, but it also carries far more risk. Therefore, investors, particularly those who are not comfortable with heightened volatility and want to capitalize on this opportunity, should consider Eli Lilly.

Prosper Junior Bakiny has positions in Eli Lilly and Recursion Pharmaceuticals. The Motley Fool has positions in and recommends Merck. The Motley Fool recommends Roche Holding AG. The Motley Fool has a disclosure policy.