IQVIA, with its vast trove of health information, is at the center of drug development, providing data, tools and services to conduct research and clinical trials. After a cycle of destocking in the supply chain, growth and order books are improving and have allowed the company to improve its forecasts. IQVIA recently launched an artificial intelligence platform in partnership with NVDIA. This could improve its competitive advantage and accelerate drug development and demand. However, many investors do not recognize the potential value that AI will unlock. Artificial intelligence is reshaping drug discovery, and IQVIA may be one of the most overlooked beneficiaries of the market. The company has a database of more than 1.2 billion healthcare records that acts as a tollbooth throughout the research and development process: each new drug target, clinical trial, and AI-driven research initiative increases demand for its data and services. As pharmaceutical companies compete to develop drugs more quickly and efficiently, IQVIA is positioned to benefit. However, despite record accumulation, growing AI adoption, rising market share, and improving earnings, the stock is still trading near its lowest valuation in five years. Many investors feared that AI would allow life sciences and healthcare companies to conduct research activities in-house, reducing demand for contract research providers like IQVIA. Instead, first-quarter results suggest the opposite: AI is helping clients identify more drug candidates, expand development pipelines, and increase demand for IQVIA's clinical research data, technology, and services. In the age of AI, proprietary data is king, and few companies have more valuable healthcare data than IQVIA. Its vast repository of patient records and clinical knowledge has become essential to modern drug development, creating a moat that competitors cannot easily replicate. As AI adoption accelerates, IQVIA's data assets should become even more valuable, strengthening its competitive position and supporting long-term growth. What is the reason for the weakness of the shares? The stock's discount reflects concerns that emerged following the post-Covid biotech slowdown, when demand for clinical research weakened and biotech funding was limited. This excess began to decline in early 2026 as clinical research demand improved, bookings strengthened, and IQVIA raised its full-year earnings guidance following first-quarter results in May. Organic growth had accelerated across its business: revenue growth from its business solutions doubled and growth from R&D solutions tripled year over year. However, the stock has also been pressured by skepticism about its investments in AI and whether this spending would generate significant revenue in the near term. Some also feared that IQVIA clients could leverage their own AI capabilities to conduct internal investigations, but that notion fails to appreciate the breadth of information IQVIA has. No company alone can replicate it. It also goes against the industry trend toward outsourcing. Unlike many AI initiatives that remain largely conceptual, IQVIA's AI offerings are already contributing to customer adoption, booking activity and improved management insights. IA: Friend or enemy? Additionally, rather than displacing contract research organizations like IQVIA, AI is beginning to help clients identify more drug targets and expand development pipelines, driving greater demand for IQVIA's data, technology and research services. CEO Ari Bousbib highlighted this trend on the company's earnings call in May, noting that AI is causing customers to ask more questions, not fewer. He cited a large pharmaceutical company that plans to double the number of molecules in its portfolio as AI discovers new drug targets, creating additional demand for CRO services. The market is pricing IQVIA as if AI were a long-term threat to the clinical research model. Evidence increasingly suggests the opposite: AI is making IQVIA's proprietary data assets and integrated workflows more valuable, setting the stage for both accelerating profits and multiple expansion. Although shares have recovered from approximately $160 to $180 since management raised guidance, they continue to trade well below historical valuation levels, leaving substantial room for multiple expansion as investors gain confidence in the impact of AI on the business. Data creates competitive advantage IQVIA was created in 2016 through the merger of IMS Health, a pioneer in healthcare data analytics, and Quintiles, the world's largest CRO. The combination produced a unique asset: arguably one of the world's largest troves of healthcare records integrated with a leading clinical trials platform. Together, these capabilities make IQVIA an essential player in a highly complex and regulated industry. Company data acts as a toll booth across the entire pharmaceutical ecosystem. Customers build critical research workflows around IQVIA's platform, resulting in retention rates exceeding 90% on core data engagements. Switching costs are substantial, as changing providers can disrupt research continuity, regulatory compliance, and the economics of clinical trials. As healthcare data becomes increasingly important to drug development, this competitive moat continues to widen. In March, the company launched IQVIA.ai, a life sciences-based artificial intelligence platform developed in collaboration with Nvidia. The platform combines IQVIA's proprietary healthcare data and customer relationships with Nvidia's artificial intelligence infrastructure to help pharmaceutical companies accelerate research, identify patients for clinical trials, and optimize administrative workflows. Already, 19 of the world's 20 largest pharmaceutical companies are using IQVIA.ai, while the company has filed more than 100 AI-related patents. Nvidia sees significant potential in the partnership. “Every moment counts when planning clinical trials, from discovery to commercial application,” said Kimberly Powell, vice president of healthcare at Nvidia. “By working with industry leaders like IQVIA, we can create domain-specific agents that can demonstrate efficiency and accuracy.” The timing couldn't be better. Drug development is becoming more complex, expensive and data-intensive, particularly in areas such as oncology and precision medicine. At the same time, AI allows researchers to pursue more drug targets and design more efficient clinical trials. Both trends increase demand for high-quality healthcare data, strengthening IQVIA's position as an indispensable partner to the pharmaceutical industry. Undervalued market leader IQVIA controls about 43.6% of the market, according to financial media company CSIMarket. Evidence suggests it is gaining market share against rivals such as Icon and Medpace, including IQVIA's growing order book, which hit a record in the first quarter. Valuation Disconnect There is a stark disconnect between IQVIA's fundamental performance and its current market price. The stock plunged in February after it lowered its original 2026 outlook, but the stock has not recovered following its upgraded guidance in May. At Tuesday's closing price of around $171, a two-stage discounted cash flow model, using a 7% weighted average cost of capital and a conservative growth slowdown, pegs IQVIA's true fair value at $326 per share, implying that the market is pricing the stock at a 47% discount to its normalized future cash flows. Multiple Rerating Potential If management continues to execute and AI-driven demand remains strong, IQVIA's current valuation appears difficult to justify. Improving growth, record order book, increasing cash generation and continued deleveraging could support a return to historical valuation ranges. Revenue in its newly streamlined Business Solutions segment increased 11.6% year-over-year driven by its high-margin AI-enabled offerings gaining substantial business traction, while its massive R&D Solutions contract pipeline grew to a record $34.2 billion with accelerating book-to-bill ratio. Additionally, the $80 million interest expense hurdle that depressed near-term earnings guidance following its 2025 financing activities has established a clear operating fund. As IQVIA leverages its high visibility and 99% free cash flow conversion to systematically pay down its $13.89 billion net debt and reduce its 3.62x net leverage ratio, aggressive balance sheet deleveraging will drive multiple expansion back to its historical forward P/E floor. IQVIA is also buying back shares. In the first quarter, it bought back $552 million of its shares. On May 7, the company increased its program by $2 billion to a total authorization of $3.2 billion. The expansion of the buyback program indicates management's strong confidence in the company's financial health, its cash generation capacity and the belief that IQVIA shares are undervalued. 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