Recursion Pharmaceuticals Inc. (RXRX) is having quite a day. Shares rocketed 18.10% to $4.95 on Wednesday after JPMorgan decided the biotech company deserves a second look.

What's Driving the Rally?

JPMorgan analyst Eric Joseph upgraded Recursion to Overweight from Neutral and bumped the price target to $11 from $10. The move signals stronger confidence in the company's AI-powered drug discovery platform, which is apparently starting to prove itself.

The real excitement centers on REC-4881, which JPMorgan says has "blockbuster potential." The firm projects peak U.S. sales could top $1 billion with a 60% chance of success. That's the kind of number that gets investors excited. Meanwhile, another candidate, REC-617, has shown encouraging early results in platinum-resistant ovarian cancer.

JPMorgan sees even more upside if Recursion can expand patient reach, strengthen market penetration, and optimize pricing. The analysts note that the company's AI-driven pipeline is getting validated both through clinical outcomes and pharmaceutical partnerships.

The AI Angle

Timing matters here. The upgrade arrives as AI firms and biotech companies are exploring deeper collaborations. Recursion, which has backing from Nvidia, might be catching some extra attention Wednesday following reports from The Information that OpenAI and Anthropic are pursuing data partnerships with biotechs.

The report suggests major AI players are hunting for specialized data to fuel AI training. While Recursion wasn't specifically named, its AI-focused approach appears to be resonating with investors on Wednesday.