3 pharmaceutical stocks that will explode thanks to AI

A Deloitte report on artificial intelligence (AI) in the life sciences puts it bluntly. Big data is the new currency for biopharmaceutical companies. The quantum leap in computing power that AI is enabling pharmaceutical companies to develop products faster than ever. This led investors to start looking for the best AI-driven pharmaceutical stocks.

The intersection of data science and machine learning makes research and development fundamentally different from what it was before. The discovery of molecules will be much faster than it has ever been. This promises to increase drug development and reduce time to market. The applications are multiplying, but the overall result is the same, AI will reduce time-consuming bottlenecks in drug discovery and lead to massive growth for the companies that get the most out of the technology. Over time, this will lead to massive revenue growth overall, as the lengthy discovery phase is shortened. Let’s take a look at some pharma stocks to buy that take advantage of AI technology.

Exscientia (EXAI)

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exscientia (NASDAQ:EXAI) has got to be one of the most interesting AI pharma stocks. It’s a relatively cheap stock with analyst consensus triple the potential.

EXAI could very well achieve this target price based on recent news that the company announced that its 6th molecule created through its generative AI platform was to enter the clinical phase. This particular drug is intended to treat psychiatric illnesses and is developed with Sumitomo Dainippon Pharma (OTCMKTS:DNPUF). This is the 3rd AI-developed medicine created for Sumitomo with Exsceintia’s AI platform. Exscientia has clearly proven its value to Sumitomo and should heavily market this alliance to grow its platform.

Exscientia is also developing its own AI-based drug pipeline. This includes 2 oncology drugs that are currently progressing to clinical studies. The company’s design as a service platform will help diversify its business as it can sell the service while developing drugs that will be owned on its own.

Schrödinger (SDGR)

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Schrödinger (NASDAQ:GDPR) is similar to Exscientia in terms of activity. Both companies have computational AI platforms used to discover potentially useful molecules. And both companies are gearing this service toward in-house development and as a service.

Schrödinger’s physics-based computing platform is used for drug discovery. However, unlike Exscientia, it goes further and has utility in multiple industries including aerospace, energy, semiconductors and electronics. Schrodinger’s pipeline currently includes 9 drugs in clinical trials, dozens more in discovery and preclinical stages, and 2 FDA-approved drugs.

SDGR is already booming thanks to AI and machine learning. Drug discovery revenue more than doubled year-over-year in the first quarter of 2023, reaching $32.6 million. This accounted for about half of the company’s sales, which increased 33% over the same period.

The company expects drug discovery revenue to be between $70 million and $90 million in 2023. It receives large distributions from time to time which can also boost revenue.

Predictive oncology (POAI)

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Predictive oncology (NASDAQ:POAI) is an early-stage AI-based pharmaceutical stock with a differentiated business model. The company has a tumor sample biodeposit, a laboratory and a good manufacturing practice facility. All of this differentiates the company from more data-intensive companies that might lack real samples from which to draw insights.

Still, predictive oncology isn’t really making a lot of money now. It reported $300,000 in Q1 2022 revenue, which fell to less than $250,000 in Q1 2023. But those low sales count for far less than the company’s announced partnerships this quarter. Specifically, its partnership with Cancer Research Horizons (HRC) which is the largest private cancer funder in the world. HRC spends approximately $70 million on research each year.

This partnership suggests that predictive oncology may soon have far greater resources. This in turn could be good news for POAI stocks.

At the date of publication, Alex Sirois did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.