Gilead Sciences, Inc. (NASDAQ:GILD) shares are up more than 24% this year, ahead of the S&P 500’s 14%. Gilead makes HIV, liver disease and cancer drugs. The stock is part of our coverage of the 8 best-performing stock picks by Claude AI in 2026.
Why Gilead Stock Is Up
Gilead Q2 sales rose 10% year over year, its strongest second-quarter growth in three years. HIV sales rose 12% because Gilead’s prevention business grew quickly, with Descovy sales up 48% and total PrEP sales doubling. Gilead also raised its 2026 HIV sales growth outlook to 9% to 10% from 8%. Baron Health Care Fund said the stock gave back some gains in the second quarter after a strong first quarter tied to the Yeztugo launch, and you can read what the fund said about Gilead’s HIV growth engine.
Reported earnings look weak because of acquisitions. Gilead bought Arcellx, Tubulis and Ouro Medicines, and accounting rules made it expense the value of their unfinished research in the second quarter.
Bull Case
Gilead has a durable edge in HIV because patients rarely switch treatments once they are stable, and the company now sells prevention drugs on top of treatment. Its twice-yearly Yeztugo is on the market, the FDA accepted an application for a once-weekly oral PrEP pill, and Gilead extended its licensing deals in September to cover an investigational once-yearly shot. We covered how the once-yearly lenacapavir plan could power Gilead’s next growth phase. Gilead’s CFO said in March that the company faces no major loss of exclusivity until 2036.
Gilead also has new products beyond HIV. The FDA will decide on anito-cel, a multiple myeloma cell therapy from the Arcellx deal, on December 23. Trodelvy won approval for first-line triple-negative breast cancer, and Hepcludex became the first FDA-approved treatment for hepatitis delta. The Tubulis and Ouro deals add antibody-drug conjugates and an autoimmune therapy to the pipeline. Hedge funds like the setup, with 76 holding the stock at the end of the second quarter, and Gilead ranks 10th on our list of the 10 best healthcare stocks to buy according to hedge funds.
Photo by National Cancer Institute on Unsplash
Bear Case
Gilead depends on HIV for most of its product sales, and Biktarvy, its largest drug, is on Medicare’s price negotiation list. The negotiated price takes effect in January 2028, and it could pull HIV growth back to single digits. Gilead depends on HIV for most of its product sales, and Biktarvy, its largest drug, is on Medicare’s price negotiation list. The negotiated price takes effect in January 2028, and it could slow HIV growth. Gilead is also paying a lot for growth. Its cash fell sharply this year as it paid for the Arcellx, Tubulis and Ouro deals, and the Arcellx deal depends on the FDA approving anito-cel, with a decision due December 23. Parts of the business are shrinking, with cell therapy sales down 14% on competition and sales of the COVID drug Veklury down sharply. After the rally, the stock has less room for disappointment.
Valuation
Gilead’s trailing and forward P/E show as not meaningful on most data sites because of the acquisition charges. Yahoo Finance puts its normalized forward P/E at about 15.5, below the S&P 500’s forward P/E of 19.1. The company says illustrative earnings per share, which exclude the acquisition charges, grew about 13% in the second quarter and 7% in the first half. It guides to base business sales growth of 6% to 7% in 2026, close to the market’s long-run earnings growth of 10%. We looked at whether 15.5 times is cheap enough after the rally.
While we acknowledge the risk and potential of GILD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GILD and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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