People are increasingly describing Nvidia as almost becoming a “tech ETF” in its own right. The argument is that the enormous cash flows generated by the current AI cycle are being reinvested into acquisitions, new platforms and adjacent technologies, potentially positioning Nvidia to remain dominant long after the present GPU investment boom eventually normalises.
I wonder if a similar argument can now be made for Eli Lilly.
Lilly is benefiting from an extraordinary windfall from Zepbound, but rather than simply harvesting those profits, it is reinvesting aggressively in manufacturing capacity, R&D, new drug platforms and acquisitions. In effect, it could gradually become something resembling a diversified “big pharma ETF” within a single company, with infrastructure, scientific capabilities and a pipeline that could remain valuable well beyond the current obesity-drug cycle.
At roughly a $1 trillion market cap, Lilly is obviously not cheap. The question is whether investors are underestimating just how much larger the company could ultimately become if it successfully uses the GLP-1 windfall to build dominant positions across multiple therapeutic areas.
What do people think of Eli Lilly at current valuations? Is too much future growth already priced in, or could the long-term opportunity be considerably greater than the market cap suggests?