While everyone's watching AI reshape chipmakers and tech sectors, the most profound transformation may be unfolding where no one’s looking: biotech.
Artificial intelligence is quietly powering the biggest rally in biotech stocks since the early 2000s — and it's not hype, it’s math.
The iShares Biotechnology ETF (NYSE:IBB) has risen for six straight months, notching its longest winning streak since 2012. But it's not just about consistency—the strength of the move is historic.
The sector is up 40% in that stretch, making it the best 6-month rolling return for biotech since September 2003.
Biotech has been a long-underperforming sector that is now finally getting a structural narrative: AI is beginning to solve the cost and efficiency challenges that have plagued pharmaceutical R&D for decades.
Chart: Biotech Stocks Log Best 6-Rally In Over 20 Years
‘We're No Longer Betting on Science Fiction’
For decades, drug discovery has been defined by brutal timelines, extreme costs and eye-watering failure rates.
The average drug costs $2.23 billion to develop, takes up to 15 years, and has just a 7.9% chance of success in human testing. That's why pharma stocks often trade like utilities: slow, defensive, and rarely exciting.
But AI is breaking that mold.
"We are no longer betting on science fiction; we are investing in the industrialization of biology," said Jordi Visser, head of AI Macro Nexus Research at 22V Research, in his latest report.
According to Visser, we are on the cusp of a foundational shift: from labor-driven science to compute-driven discovery. In this model, biology is treated more like information. R&D spending becomes a platform cost, marginal costs drop, and software-like scalability emerges.
The result is a pipeline that moves faster, costs less, and becomes more predictable—three variables that have historically limited the sector's appeal to growth investors.
"Of all the industries where AI will benefit mankind and bring efficiency, none will be more impactful than health. This month may be the beginning of investors finally understanding its importance," Visser said.
Read also: Best Healthcare Stocks Right Now
Will Investors Catch Up To The Science?
While investor skepticism around AI persists—particularly among those focused on valuation ratios and past market cycles—Visser sees this as a sign of how early we still are.
"Yet I continue to hear the same chorus from the cheap seats: investors who spend their days with financial history charts and comparisons, not scientific reality, insist that AI is a bubble," he wrote.
He challenges those investors to consider the scale of what AI might unlock: longer lifespans, cheaper treatment, higher productivity and potentially, cures once considered unreachable.
In his report, he shares a thought experiment: he asked ChatGPT what markets would do if a cure for cancer were discovered and widely available.
The response? A 20–30% immediate surge in global equities, followed by a decade of 50–100% gains as markets reprice life expectancy, healthcare costs and long-term consumption.
Behind the bold numbers is a thesis grounded in real progress.
Companies like Moderna Inc. (NASDAQ:MRNA), Insilico Medicine and Eli Lilly Co. (NYSE:LLY) are already using AI in ways that reshape how drug development timelines, cost structures and success rates behave.
Visser's takeaway is clear: this isn't early research anymore—it's implementation.
His conclusion is simple and forward-looking: "The [AI] capital expenditure phase is over. The implementation phase has begun."
Read Next:
Image created using artificial intelligence via Midjourney.
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
