Another alliance of health care and AI signals why pharma stocks could be back
Bristol Myers Squibb and Microsoft ‘s new partnership aimed at accelerating early detection of lung cancer marks the latest way health care and artificial intelligence are rapidly intersecting. Bristol Myers said on Tuesday it will work with Microsoft’s AI-powered radiology platform to develop and launch imaging algorithms. These new tools, which can be used to analyze X-rays and CT scans, will help clinicians see hard-to-spot lung nodules and identify patients with earlier stages of the disease. The announcement comes less than a week after the CEOs of another pair of portfolio names, Eli Lilly and Nvidia, sat down at the JPMorgan Healthcare Conference in San Francisco to talk about the role AI can play in drug discovery. The companies pledged to jointly invest “up to $1 billion in talent, infrastructure, and compute over five years” to support a collaborative innovation lab. Jim Cramer, who attended last week’s conference, gushed about the meeting of Eli Lilly ‘s David Ricks and Nvidia ‘s Jensen Huang and their new venture in his Sunday column . “There is not enough of the kind of engineering that Jensen brings to the table in pharma,” Jim wrote, adding that Jensen sees his platform as “uniquely created to quicken reasoning and come up with more keys to unlock more locks in the human body.” After talking with more than 15 different CEOs at the conference, Jim said, “Health care is going to resume its rightful place in big-time managers’ portfolios, and that place will be funded by donations from the brutal war over who can claim to have spent the most to lose the least money on artificial intelligence.” In other words, health care stocks will be bought as money comes out of the AI trade. A main driver of the rotation: The environment for health-care deals has become more inviting under President Donald Trump after losing steam during the Biden administration. Jim said the excitement at the JPMorgan conference was palpable. BMY 1Y mountain Bristol Myers 1 year As for Bristol Myers specifically, the Club has impatiently held onto the stock for the potential of Cobenfy. In light of some setbacks for the schizophrenia drug, Jim wrote Sunday he would consider swapping the Club’s small position in Bristol Myers, about a 1.54% weighting in the portfolio, for a larger one in a pharma or biotech name. He cited Amgen , Regeneron , and Novartis as possibilities. Bristol Myers shares gained roughly 19.6% in the fourth quarter last year, earning it a spot in our December highlight of Club holdings positioned for continued momentum this year. The stock’s success, however, hinges on trial readouts for Cobenfy, which has already been green-lighted to treat schizophrenia in adults but fell short in a trial for use as an additional treatment. More phase three trial readouts are expected this year, a likely catalyst for the stock, if the results are favorable. That might be too long to wait and too risky. Jim will run through plans for Bristol Myers and the rest of the Club stocks during our January Monthly Meeting at noon ET on Thursday. (Jim Cramer’s Charitable Trust is long BMY, LLY, NVDA, MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
