Biotech is resistant to AI disruption. Josh Brown likes these two stocks in the industry

AbbVie reported 2025 revenue of $61.2B, up 8.6% y/y with its ex‑Humira growth platform accelerating 14.5% in Q4; the stock is trading around $230, sitting above the 50‑day (~$225) and the 200‑day (~$213) which the authors cite as the primary risk stop. Amgen reported 2025 revenue of $36.8B, up 10% y/y; shares have pulled back toward the rising 50‑day (~$352) after a run to the high $370s, with the 200‑day (~$312) identified as the level that would signal a trend reset if breached. The column frames biotech as a HALO sector benefiting from AI-driven efficiencies in drug discovery and recommends moving‑average based risk management; implications are sector/stock specific rather than market‑wide.

Analysis

AI is not just an input to discovery — it changes where value accrues across the biotech stack. Faster target ID and in‑silico lead optimization compress timelines and increase demand for scaleable biologics manufacturing and analytics-enabled CRO/CDMO capacity; that lifts companies that own physical production footprints and data moats more than pure-play discovery boutiques.

The second‑order winners are therefore capacity and ops plays: CDMOs, lab automation and data integrators will see utilization and pricing power expand before incremental drugs hit sales. Conversely, mid‑tier specialty pharmas with narrow commercial infrastructures or single‑asset dependence are more exposed — they face both faster competitor entry and greater difficulty monetizing a suddenly crowded approval pipeline.

Near term (days–months) the primary risks are sentiment-driven: rotations out of defensives, headline FDA delays or one high‑profile Phase 3 miss will trigger outsized flows. Over 12–36 months the structural risk is the democratization of discovery — AI lowers the marginal cost of bringing a candidate to IND, which could accelerate competition and compress peak sales, meaning incumbents must either internalize AI or buy it to defend margins. That bifurcates winners (scale + data) from losers (single-product, low operational optionality).

Key Decisions for Investors

• Long ABBV (core): Buy ABBV equity as a 1–2% portfolio weight for a 9–12 month hold to capture durable cashflow optionality and pipeline optionality; hedge with a 1y 8–12% OTM put (cost ~— depending on strikes) to cap downside. Target +18–25% total return in 12 months; reduce position if downside protection costs >2% of position value.
• Tactical AMGN pullback entry: Initiate a 6–9 month tactical long via a bull call spread (buy 9–12 month near‑ATM call, sell 1.2x OTM call) sized 0.5–1% NAV to limit capital and volatility exposure. Reward: skewed upside capture if sector re‑rating continues; Risk: capped loss = premium paid (~100% defined).
• CDMO/CRO levered play: Buy CTLT or IQV (choose based on valuation and balance sheet) for 12–24 months to capture demand from AI-accelerated biologics development. Size 1–2% NAV; pair against a small short in ARKG (or similar discovery ETF) to hedge directional biotech beta. Target +20–30% while protecting against a sectorwide drawdown.
• Momentum/fade hedge: Establish a small (0.5% NAV) short of thematic discovery/AI biotech ETF (e.g., ARKG) or individual microcap discovery names showing >100% YTD moves. Time horizon 3–6 months for mean reversion; set strict stop (8–12%) due to headline sensitivity and gamma risk.