In this article, we will take a look at our list of AI healthcare stocks. To see more such companies, go directly to 5 AI Healthcare Stocks To Buy.
Artificial Intelligence is set to disrupt several industries and healthcare is one of the primary industries that are expected to see the positive effects of the AI revolution. A 2022 report by Data Bridge Market Research said that the AI healthcare market is expected to grow at a CAGR of a whopping 51.37% from 2022 to 2029 to reach a value of $175.22 billion. The report also said that the major players operating in this lucrative market include NVIDIA Corporation, Alphabet, Microsoft, Medtronic, among many others.
Similarly, another report published in October by MarketsandMarkets said that AI in the Medical Diagnostics market is expected to grow from $1 billion 2022 to $5.5 billion by 2027. The report said that the AI-based medical devices market is growing amid government-based initiatives and the rise in adoption of AI solutions by radiologists to reduce work load.
As you will see in this article, drug discovery is the biggest area where AI is showing its effects. There are several important drug discovery startups in the world that are using artificial intelligence to come up with innovative drugs. According to a report by European Parliament, AI uses data modeling and machine learning to generate several drug combinations very quickly. These models expand the genetic pool of drugs and help experts understand their possible outcomes. The report gives an example where researchers trained a deep learning algorithm to predict molecules’ potential antimicrobial activity. The AI-based algorithm was able to process billions of molecules and also tested over 107 million, identifying eight antibacterial compounds that were structurally distant from known antibiotics. Without AI, this massive processing would take a lot of time and human effort.
For this article we first listed several companies that are using AI to create innovative healthcare solutions like drugs, diagnostics systems and medical devices. We also included major tech companies which are either positioned to benefit from the AI revolution in the healthcare sector or are selling their AI technologies directly to healthcare and medical companies. Not all stocks in this article are pure AI healthcare stocks. We started from the non-pure-play AI healthcare stocks to those that are directly using AI to make treatments in the sector.
List of AI Healthcare Stocks
13. Microsoft Corporation (NASDAQ:MSFT)
Microsoft Corporation (NASDAQ:MSFT) makes it to the list of the AI healthcare stocks list because the company is investing millions in the space and letting hundreds of healthcare startups use its technologies to make progress in the domain. Microsoft Corporation (NASDAQ:MSFT) has awarded 180 grants to startups so that they could access the company’s technologies and use AI to solve major problems in the healthcare sector. Some notable grantees include Novartis Foundation, SRL Diagnostics, BC Cancer, UNOS, among many others. These companies are using AI technologies, thanks to Microsoft, to solve important issues in the healthcare sector.
In 2020, Microsoft Corporation (NASDAQ:MSFT) announced it would spend $40 million to support collaborative projects leveraging artificial intelligence for medical research and discoveries.
TimesSquare Capital made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2022 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) develops, licenses, and supports software solutions worldwide. Fiscal fourth quarter results were generally in line with consensus estimates, though profits missed slightly. While its Azure cloud business continues to perform well, the personal computer market has declined with inflation having an impact. Its shares experienced a -9% selloff.”
12. Alphabet Inc. (NASDAQ:GOOG)
Alphabet Inc. (NASDAQ:GOOG) is one of the biggest companies operating in the AI-powered healthcare domain. Verily Life Sciences is Alphabet Inc. (NASDAQ:GOOG)’s research arm devoted to the study of life sciences. In October 2022, the company launched a new set of tools that would allow medical companies and hospitals to use Alphabet’s technology to search through imaging metadata or develop software to quickly analyze images for diagnoses. Alphabet Inc. (NASDAQ:GOOG) mentions a whole list of its technologies in the healthcare sector that helps doctors leverage Alphabet’s AI capabilities to offer better healthcare solutions.
LVS Advisory made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q4 2022 investor letter:
“We sold our remaining shares of Alphabet Inc. (NASDAQ:GOOG) in the quarter, taking a profit. Google was a day 1 holding for the Growth Portfolio and it has performed well.
18 years after its initial public offering, Google is showing signs of business maturity. During the 2008/2009 recession, Google’s business was able to power through with double digit growth. As of Q3 2022, Google’s core search business has decelerated to low single digit growth and the YouTube and display network businesses reported revenue decline. At the same time, the company’s spending is outpacing the rate of expected revenue growth. Advertising spend is cyclical and the digital advertising industry is fragmenting as many major consumer platforms are scrambling to turn on new streams of revenue (Netflix, Spotify, TikTok, etc.).
My best guess is that Google’s financial results could be quite disappointing, and my estimates are far below what Wall Street analysts are currently modeling. I do not make sell decisions purely based on near term results expectations as they are generally priced into the stock but my downbeat assumptions for Google come at a time when we are finding more value in other areas of the market that we would prefer to allocate to.”
11. NVIDIA Corporation (NASDAQ:NVDA)
NVIDIA Corporation (NASDAQ:NVDA) is one of the biggest chip companies in the world. NVIDIA Corporation (NASDAQ:NVDA)’s influence in the healthcare industry is expanding, thanks to its software and hardware that equip healthcare companies to further their AI abilities. For example, Nvidia’s MONAI (Medical Open Network for Artificial Intelligence) is being deployed by major healthcare providers. The open-source platform benefits healthcare companies in medical research, imaging and deep learning.
NVIDIA Corporation (NASDAQ:NVDA) also sells several hardware devices to the medical and healthcare industry. For example, its NVIDIA Clara Holoscan is used for advanced surgeries and imaging.
As of the end of the third quarter, 89 hedge funds tracked by Insider Monkey reported having stakes in NVIDIA Corporation (NASDAQ:NVDA).
Ave Maria made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2022 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) Corporation primarily designs and sells the accelerated computer hardware and software that is indispensable for autonomous vehicle, gaming, and artificial intelligence applications. Near term uncertainty from the crypto market correction and the semiconductor cycle have weighed on shares and offered an attractive entry point for long-term investors.”
10. McKesson Corporation (NYSE:MCK)
McKesson Corporation (NYSE:MCK) is one of the biggest healthcare companies in the US. The company has been actively investing in AI over the past several years. McKesson Corporation (NYSE:MCK) invested in Komodo Health which runs a predictive analytics platform that helps doctors diagnose and keep track of disease progression in patients. McKesson Corporation (NYSE:MCK) is also among the leading AI adapters in the country, having used AI technologies to automate several tasks to free up time and effort of its workforce. For example, the company partnered with AI startup Genpact to automate various workplace tasks.
As of the end of the third quarter, 51 hedge funds tracked by Insider Monkey reported having stakes in McKesson Corporation (NYSE:MCK), compared to 47 funds in the previous quarter.
9. Medtronic plc (NYSE:MDT)
Medtronic plc (NYSE:MDT) is one of the most famous medical device companies in the world. Medtronic plc (NYSE:MDT) has a first-mover advantage in the market when it comes to AI, as it is already selling several AI-based medical devices that address important medical needs. For example, Medtronic plc (NYSE:MDT) sells GI Genius™ Intelligent Endoscopy Module, a computer-aided, AI-based polyp detection system. The device processes colonoscopy images that may contain regions consistent with colorectal lesions.
In 2021, Medtronic plc (NYSE:MDT)’s senior vice president and chief communications officer, Torod Neptune, said in an interview that Medtronic plc (NYSE:MDT) plans to invest heavily into the development of AI solutions.
8. Pfizer Inc. (NYSE:PFE)
Pfizer Inc. (NYSE:PFE) is perhaps one of the most famous healthcare stocks in the world. A total of 77 hedge funds tracked by Insider Monkey had stakes in Pfizer Inc. (NYSE:PFE) as of the end of the third quarter. Pfizer Inc. (NYSE:PFE) is also tapping into the AI capabilities.
Pfizer Inc. (NYSE:PFE) has a full business segment dedicated to AI, called AI Digital Sciences. Sandeep Menon, chief scientific officer, AI digital sciences, Pfizer Inc. (NYSE:PFE), said in a recent interview that Pfizer is building a ML Research hub. The main task of this hub will be to work on predictive analysis and disease pathophysiology using AI and ML concepts.
7. Lantheus Holdings, Inc. (NASDAQ:LNTH)
Lantheus Holdings, Inc. (NASDAQ:LNTH) uses AI for diagnostics. Lantheus Holdings, Inc. (NASDAQ:LNTH) is behind Lantheus Medical Imaging, Inc., Progenics Pharmaceuticals, Inc. and EXINI Diagnostics AB. The company is known for PYLARIFY, which is used for the detection of suspected recurrent or metastatic prostate cancer. It also made an AI-based system called PYLARIFY AI. This system helps experts in the evaluation of PSMA PET images. The company has several other AI-based ultrasound and imaging systems that are expected to see growth in the future.
As of the end of the third quarter, 35 hedge funds tracked by Insider Monkey had stakes in Lantheus Holdings, Inc. (NASDAQ:LNTH). The total value of these stakes was $422 million.
6. BenevolentAI S.A. (AMS:BAI)
BenevolentAI S.A. (AMS:BAI) is a UK-based company that is operating in the lucrative space of the pharmaceutical market: drug discovery. BenevolentAI S.A. (AMS:BAI) uses AI and machine learning to generate deep knowledge graphs that help experts find the real causes and treatment of diseases.
In January last year, BenevolentAI S.A. (AMS:BAI) announced that it was expanding its AI-driven drug discovery collaboration with AstraZeneca, doubling the number of disease areas being explored through the partnership. The expansion adds systemic lupus erythematosus (SLE) and heart failure (HF) to ongoing work to identify multiple novel targets in chronic kidney disease (CKD) and idiopathic pulmonary fibrosis (IPF). The two companies first signed a partnership in 2019.
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Disclosure: None. List of AI Healthcare Stocks is originally published on Insider Monkey.