2 Top AI Healthcare Stocks to Buy and Hold

Many of the top companies successfully cashing in on artificial intelligence (AI) are in the technology sector. However, AI is having an impact across every industry, and plenty of companies outside tech are slowly but surely making AI moves that could pay rich dividends in the future.

Two such corporations in the healthcare sector are Pfizer (NYSE: PFE) and Eli Lilly (NYSE: LLY). Here's why these AI healthcare stocks are attractive to buy.

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1. Pfizer

Pfizer has been using AI since well before the industry's inflection point, which arguably came with the launch of ChatGPT in late 2022. By then, Pfizer had used the technology and its applications to help it develop its coronavirus vaccine, Comirnaty, in record time in collaboration with BioNTech.

The company is now doubling down on AI across its business. Pfizer is implementing AI in drug discovery (to help speed the time to market for new compounds), across its commercial efforts, in manufacturing optimization efforts, and more.

Now, the drugmaker has not performed well recently. Comirnaty no longer generates the sales it once did; some of its older products are facing stiff competition, and it will also encounter several important patent cliffs in the next two years, including that of Eliquis, an anticoagulant that is among its best-selling medicines.

However, Pfizer is also making solid clinical progress. It boasts some exciting candidates for which it will launch phase 3 studies this year, if it hasn't already. These include MET-097i for weight loss and an investigational cancer medicine called PF'4404.

Pfizer's AI efforts won't revolutionize the business or allow it to bounce back overnight. However, they have already helped it meaningfully reduce expenses, and even minor, regular improvements in other areas, including research and development (R&D), could make a difference in the long run. The stock looks attractive, especially given its significant underperformance relative to the market in recent years.

2. Eli Lilly

Eli Lilly recently finished building the most powerful supercomputer in the pharmaceutical industry with the help of Nvidia. The drugmaker will seek to boost its ability to develop novel medicines. Eli Lilly also launched an AI innovation lab where its scientists will work with Nvidia's engineers to improve the drug discovery and development process. Investors should look at Eli Lilly's AI-related efforts as icing on the cake, as the company is arguably already one of the best growth stocks to consider in the healthcare sector.

The drugmaker's revenue has been growing much faster than that of its similarly sized peers, largely thanks to its dominance in the fast-growing weight loss market. The company's tirzepatide, marketed as Zepbound for weight loss, became the world's best-selling drug last year and should maintain its northbound trajectory for a while.

Eli Lilly has exciting pipeline candidates in this field, including an oral GLP-1 medicine, orforglipron, that could earn approval this year. Beyond that, Eli Lilly has diversified its lineup and pipeline. It features blockbusters in other areas, such as oncology and immunology. The stock looks unstoppable given its innovative qualities, deep pipeline, and leadership in the weight loss market.

So, investors should strongly consider the stock, especially as it seeks to lay a stronger foundation for the future through investments in AI that could pay off down the road.

Prosper Junior Bakiny has positions in Eli Lilly and Nvidia. The Motley Fool has positions in and recommends Nvidia and Pfizer. The Motley Fool recommends BioNTech Se. The Motley Fool has a disclosure policy.