Tech Stocks Took a Hit—These 2 Pharma Stocks Are Near New Highs

Key Points

• Biotech and pharmaceutical stocks have shown relative strength and held near highs even as the technology and AI trade sold off sharply.
• The iShares Biotechnology ETF is up almost 21% year-to-date, reflecting gains across both defensive pharma giants and growth-oriented biotech innovators.
• Eli Lilly and Pfizer stand out within the sector, with Lilly leading on GLP-1 drug growth and Pfizer offering a cheap valuation plus high dividend yield.

While attention has focused on the brutal sell-off tearing through the technology sector and the AI trade, something notable has been happening in another corner of the market. The biotech and pharmaceutical sector has held its ground and, relatively speaking, done so impressively.

As the Nasdaq-100 and the high-flying AI names have been clobbered in recent sessions, healthcare names, especially biotech and pharma, have refused to break down. That kind of relative strength amid a broad risk-off move is exactly what's worth paying attention to.

One of the clearest ways to track the sector is the iShares Biotechnology ETF NASDAQ: IBB, which holds a broad basket spanning both high-growth biotech innovators and the large, established pharmaceutical giants.

The fund is up almost 21% year-to-date and continues to trade near the top of its range, even as tech has rolled over.

Why Biotech and Pharma Are Attracting Attention

So why is the space holding up? It helps to separate two things that often get lumped together. True biotech, the smaller, innovation-driven companies chasing breakthroughs and clinical milestones, is a genuine growth space, speculative and volatile by nature. The large, established pharmaceutical names are a different animal: proven drugs, mature pipelines, and steady, recurring revenue make them defensive businesses. People need their medicines regardless of the economy or the stock market, giving pharma giants dependable, far less cyclical cash flows.

Both halves have reasons to be catching a bid. The established pharma heavyweights offer the stability capital seeks as it flees stretched valuations in the AI trade. The biotech side, meanwhile, has its own tailwinds: a pickup in acquisition activity across the sector, improving sentiment, and growing excitement around AI-driven efficiency and breakthrough potential in drug discovery. One side brings defensive stability, the other brings innovation and upside, and both are working right now.

Identifying relative strength is one thing, but the more interesting question is what comes next. If the broader market finds its footing and the sector has continued to hold firm, it could be well positioned to outperform on the next leg higher. With that in mind, here are two individual names worth watching, which stand out for their recent relative strength and outperformance.

Eli Lilly: The Growth Engine Near Its Highs

Eli Lilly NYSE: LLY is the pharma giant leading the pack. The stock is up almost 16% year to date and trades within roughly 4% of its 52-week high, displaying notable relative strength as the broader market wobbles. More interestingly, it has been consolidating tightly near those highs, suggesting a potential bullish breakout. Lilly's run is driven by its dominance in the booming GLP-1 obesity and diabetes market, led by Mounjaro and Zepbound, which has driven projected earnings growth north of 40%.

Despite that growth, Lilly behaves defensively, with a beta of just 0.46. Analysts rate it a Moderate Buy, with an average price target of $1,313.43. The stock isn't cheap at a forward price-to-earnings ratio of around 37, but that premium reflects its status as one of the fastest-growing large caps in healthcare and one holding up far better than most of the market right now.

Pfizer: The Value-and-Income Turnaround

Pfizer NYSE: PFE offers a very different profile, and it has quietly been one of the sector's standout performers this year. The stock is up more than 18% year to date and sits less than 2% from its 52-week high, having firmly held above prior resistance, which now acts as newfound support as it presses on the verge of breaking out of a tight consolidation. After several sluggish years following its pandemic-era boom, Pfizer is showing real signs of life and leadership.

What makes Pfizer compelling here is its blend of deep value and income. The stock trades at a rock-bottom forward price-to-earnings (P/E) of around 10 and pays a hefty 5.84% dividend. Analysts rate it a Hold, a reminder that the turnaround still has plenty to prove, but its cheap valuation, massive yield, and genuine price momentum have made it a magnet for investors seeking safety with upside.

Strength Worth Watching

The sector's relative strength right now is a genuine standout in an otherwise turbulent market. IBB offers exposure to the theme, while Eli Lilly and Pfizer represent two very different ways to play it: one, the high-growth leader pressing against its highs; the other, a cheap, high-yielding turnaround.

The real test will come if and when the broader market stabilizes. If the group holds firm through the turbulence, it could lead when and if the bull market resumes. For now, it is one of the few corners of the market quietly refusing to break.