My Top AI Healthcare Stock to Buy and Hold for 20 Years

Artificial intelligence (AI) isn't just a gimmick or a fad. The technology is changing the lives of individuals, reshaping entire businesses and industries, and, by some estimations, the industry will grow rapidly in the coming years, providing investors with plenty of opportunities to capitalize by investing in top AI companies. While many (perhaps most) of the leaders in the field belong in the tech sector, corporations in other sectors, including healthcare, are looking to cash in on AI as well.

And one of the best AI healthcare stocks to buy is none other than Eli Lilly (NYSE: LLY). Here's why the company is worth sticking with through the next two decades.

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Multiple AI initiatives

Eli Lilly is doubling down on AI, far more than most of its similarly sized peers in its sector. Here are three moves the company has made.

First, in September, it announced it was launching TuneLab, an AI drug discovery platform, and making it available for free to smaller biotech companies to help accelerate drug discovery. Many small drugmakers don't have the funds or data needed to train their own AI models, so that TuneLab will be useful to them. In exchange, they will provide Eli Lilly with even more data to train its own models.

Then, in October, Eli Lilly announced it was partnering with Nvidia to build the most powerful AI supercomputer in the pharmaceutical industry.

Finally, earlier this month, Eli Lilly announced it was building an AI drug discovery lab in the San Francisco Bay Area, also in partnership with Nvidia. This lab will bring together Eli Lilly's team of researchers and Nvidia's engineers to use AI to speed up drug discovery, a currently slow process.

If Eli Lilly can succeed in cutting R&D spend and research time dedicated to developing blockbuster medicine thanks to these efforts, the company and its shareholders will benefit down the line.

More reasons to buy

Eli Lilly's AI initiatives look promising, but there are other, better reasons to hold the stock through the next 20 years. Over the next decade, the company should ride the wave of the rapidly growing weight-loss market, where it is the leader. Even after it loses patent exclusivity for some of its current growth drivers, Eli Lilly should be fine. The company has improved its pipeline through internal development and acquisitions and boasts promising products across a broad range of therapeutic areas, including neuroscience, immunology, and oncology.

Over the next five years, the company should make significant clinical progress in these fields, and by the time medicines such as Zepbound and Mounjaro lose patent exclusivity -- which won't be anytime soon -- Eli Lilly will be ready.

In other words, Eli Lilly has strong innovative capabilities that allow it to overcome patent cliffs and competition. That's an important reason it can deliver outstanding returns through the next two decades, especially as its AI efforts might help boost its already strong innovative capabilities.

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