Nvidia is heading for a 118% achieve this 12 months.
Nvidia (NVDA -1.66%) is a tricky one to beat relating to share-price efficiency. The expertise big has seen its shares soar 2,500% over the previous 5 years, and this 12 months, it is heading for a 118% enhance.
There is a good motive for this unbelievable run. Nvidia dominates one in all right now’s greatest progress areas — the substitute intelligence (AI) chip market — holding an 80% share. In consequence, Nvidia’s earnings have been climbing within the triple digits to new data, quarter after quarter.
Although Nvidia makes an amazing purchase, this inventory is not the one potential winner in your portfolio within the second half of 2024. My prediction is {that a} biotech inventory working in a very dynamic area will outperform the tech big throughout this era. (It already beat Nvidia’s efficiency within the first half.)
This biotech has fallen behind over the previous six months, however main developments in its pipeline might give the inventory the enhance it wants to leap forward, as soon as once more. Learn on to seek out out extra.
Picture supply: Getty Photos.
The billion-dollar weight problems drug market
Which biotech firm are we speaking about? Viking Therapeutics (VKTX -0.50%), a participant that is making vital progress within the weight problems drug market, which Goldman Sachs Analysis predicts might attain $100 billion by the tip of the last decade. Viking is creating candidates referred to as twin GIP/GLP-1 receptor agonists, very similar to the already commercialized medicine of Eli Lilly and Novo Nordisk.
A majority of these medicine work by appearing on hormones concerned within the digestion course of, controlling blood sugar ranges and urge for food. They have been immensely well-liked, resulting in shortages out there and pushing Lilly and Novo Nordisk to develop their manufacturing capabilities.
Viking’s candidates have produced promising knowledge in medical trials. For instance, the section 2 trial of injectable candidate VK2735 met its main endpoint and all secondary endpoints, with sufferers reaching as a lot as a 15% discount in physique weight after 13 weeks. And within the section 1 trial of the pill model of the candidate, sufferers confirmed as a lot as 5.3% discount in weight in simply 28 days. The announcement of those outcomes earlier within the 12 months wowed traders, prompting the inventory to take off.
Within the second half of 2024, Viking is planning an end-of-phase 2 assembly with the U.S. Meals and Drug Administration for VK2735. Following that, it goals to launch a section 3 trial. The corporate additionally expects to begin a section 2 trial for the oral model later this 12 months. This development might provide the inventory gasoline to rocket larger within the coming months.
A possible takeover goal?
Buyers even have speculated {that a} greater biotech or pharma firm might take into account Viking as a takeover goal to get in on the booming weight reduction drug market. Additional hypothesis or concrete developments right here additionally might preserve Viking inventory flying excessive within the later months of the 12 months.
In the meantime, Nvidia might advance, as properly, particularly contemplating the corporate’s upcoming launch of its new structure Blackwell, its strongest chip ever. However Viking’s share efficiency following pipeline developments has confirmed to be higher than that of Nvidia following excellent news. When Viking reported optimistic VK2735 knowledge earlier this 12 months, the inventory surged greater than 120% in a single buying and selling session. Nvidia, after asserting the launch of a inventory cut up — information traders typically welcome — climbed about 9% in a single session.
Any optimistic information from Viking might end in outsized positive factors. With packages advancing within the coming months, extra information could possibly be on the horizon.
Lengthy-term investing
After all, that is simply short-term efficiency. Earlier than shopping for a inventory, it is necessary to contemplate its long-term potential as a result of holding on to strong firms for not less than 5 years is the way in which to really enhance your portfolio.
I anticipate Eli Lilly to dominate the burden loss drug market, because of its place right now and candidates within the pipeline. Nevertheless, contemplating the good demand on this market, Viking might carve out share down the highway — or doubtlessly be part of forces with one other firm.
Viking comes with some danger because it’s an up-and-coming participant and never a longtime one like Eli Lilly. However it additionally carries vital progress potential if pipeline packages proceed to advance efficiently. That is why this inventory — which I predict will beat Nvidia within the second half — additionally might rating a long-term win for traders.
Adria Cimino has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Goldman Sachs Group and Nvidia. The Motley Idiot recommends Novo Nordisk. The Motley Idiot has a disclosure coverage.
