The companies using AI to transform industries could become the next big winners.
Listen to the audio version of this article (generated by AI).
Hello, Reader.
Nicky Hopkins, a classically trained pianist from Middlesex, England, was never a “front man” mauled by groupies. But the biggest bands of his era valued him for a particular expertise.
From the mid-1960s through the early 1980s, he was the most in-demand session pianist in rock and roll.
He was the guy the Rolling Stones, the Beatles, the Who, and Jefferson Airplane would track down whenever they needed someone to find, as the Rock and Roll Hall of Fame put it, “the magical spaces between the guitars that would wind up filling out the song.”
And yet, almost nobody outside the music industry knows his name.
The AI conversation in 2026 is focusing almost entirely on “front men” – sexy stories like data centers the size of Liechtenstein, autonomous robots, “endless” semiconductor demand, and the trillion-dollar roll of the dice that’s funding all of it.
Those conversations are certainly thrilling, but they are focusing narrowly on the “big names” of the AI Revolution. As a result, many investors are overlooking the companies that will find the “magical spaces” between existing technologies to create revolutionary industrial processes, commercial innovations, and scientific discoveries.
Biopharmaceutical companies are among that group.
The potential payoff for them is enormous. Drug discovery has always operated on brutal economics. Decades of work, billions of dollars, and a roughly 90% failure rate for compounds that reach clinical trials.
But AI could change all of that.
Fifteen months ago, Alex Zhavoronkov, the CEO of Insilico Medicine Cayman TopCo (ISLMF), sat for a Bloomberg Television interview and predicted that a drug conceived entirely by AI would reach pharmacy shelves by the end of the decade. “I would be surprised if we don’t see it over the next five to six years,” he said.
It was a bold claim, but not an entirely crazy one.
In June 2025, Nature Medicine published promising Phase II results for a new drug called Rentosertib, which treats a serious lung disease called idiopathic pulmonary fibrosis. Patients on the highest dose saw meaningful gains in lung function compared with a placebo group that continued to decline.
Artificial intelligence deserves most of the credit for this breakthrough. Insilico Medicine used its AI platform to figure out which biological target to attack in the body (a protein called TNIK) and then designed the drug’s chemical structure from scratch.
Other AI-assisted drugs had reached human trials before Rentosertib, but this marked the first time researchers published clinical data proving that AI could handle both jobs – finding the target and designing the drug – and see the result work in real patients.
Results like these are encouraging the pharma industry to dive headlong into new AI alliances that could supercharge drug discovery.
Eli Lilly & Co. (LLY) and Nvidia Corp. (NVDA) committed to a $1 billion, five-year AI drug-discovery collaboration in January 2026. The two companies are building a joint “co-innovation lab” in the San Francisco Bay Area, where Lilly’s biologists will work alongside Nvidia’s AI engineers to run experiments and train models on Nvidia’s BioNeMo platform.
AstraZeneca Plc. (AZN) entered a wide-ranging collaboration with the Chinese biotech CSPC Pharmaceuticals Group Ltd. (CSPCY) in mid-2025, worth more than $5.2 billion in potential milestone payments. CSPC’s AI platform will hunt for new drug candidates across multiple chronic disease categories, and AstraZeneca will handle development and commercialization, once candidates clear early trials.
Merck & Co. (MRK) committed $1 billion to a partnership with Google Cloud, layering that alongside existing collaborations with Tempus AI Inc. (TEM) (for precision-medicine biomarkers) and Mayo Clinic (for access to lab results, imaging, and clinical data that can validate AI models).
Nicky Hopkins never built an electric piano, but he breathed life into that instrument to create unforgettable songs. The best companies of the AI era will follow his example. They will use the instruments of this awe-inspiring new technology to “make music” with them.
Just as AI is helping transform biopharma, it’s creating opportunities across many industries.
I’ll share where to find the best AI opportunities below. But first, let’s take a look at what we covered here at Smart Money last week.
Smart Money Roundup
How My “Against-the-Grain” Approach Finds AI’s Hidden Winners
August 12, 2026
I’m putting my attention on the companies supplying the resources AI desperately needs. So, I’ll show you why the raw materials behind the AI boom could be one of its most overlooked opportunities. Then, like a nesting doll, I’ll reveal a hidden play within that overlooked theme – a turnaround opportunity hiding one layer deeper.
Don’t Get Distracted from the $22 Trillion AI Opportunity Ahead
August 13, 2026
Taking your eyes off the road can have serious consequences. The same is true for investing. While investors are busy reacting to the latest headline, AI is quietly reshaping one of the biggest forces “driving” the economy: work itself. Let’s keep our eyes on the road and follow the winding AI opportunity – from the jobs it will transform to the companies supplying the tools that will power what comes next.
AI’s $130 Billion Problem – and the Portfolio Created to Solve It
August 15, 2026
Companies that already have the land, power and facilities needed for AI data centers could be sitting on valuable real estate – literally. And a recent deal made between AI giant Anthropic and an unlikely infrastructure provider offers a glimpse of what that opportunity could look like.
I’ll take a closer look at that deal to show you how one AI bottleneck can create opportunities across multiple industries. Then, I’ll reveal how we’re positioning for those very opportunities.
Why The Fed’s Balancing Act Is Tilting in Wall Street’s Favor
August 16, 2026
My InvestorPlace colleague Louis Navellier has been watching two very important trends collide: cooling inflation and a weakening labor market. And that could put the Federal Reserve in a very interesting position.
Louis is joining us today to break down the latest inflation data, what it could mean for the Fed’s next move, and why he believes the setup may be increasingly favorable for stocks.
Let’s Make Music Together
The biggest AI opportunity may not belong to the companies building the technology. It may belong to the companies that know how to use it to create something extraordinary.
The problem is that once you start looking beyond the obvious AI names, the opportunity set gets enormous. There are now hundreds of companies using AI in different ways, across different industries – and figuring out which ones deserve your attention is becoming almost as important as finding the technology itself.
That’s where our approach to AI investing comes into play.
Rather than simply handing you another promising AI stock, my InvestorPlace colleagues Louis Navellier, Luke Lango, and I have gone back through our research and narrowed it down to the companies we believe belong together in one portfolio.
One instrument can make a sound, “magical” though it may be. But an orchestra, on the other hand, turns individual sounds into something greater.
Likewise, one AI stock might benefit enormously from the boom. But a portfolio of complementary companies can help investors capture that broader opportunity.
That’s the purpose of the newly rebuilt AI Revolution Portfolio.
Louis, Luke, and I have sifted through hundreds of ideas and created a portfolio of roughly 20 stocks, with specific allocation percentages for each position.
Join us on Wednesday, August 19, at 10 a.m. Eastern for a special presentation where we’ll unveil our new portfolio and show you exactly how we are positioning for AI’s next phase.
Click here to reserve your spot.
Regards,
Eric Fry
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