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Just after the third quarter, we suddenly found that the pure AI trading of Nvidia (NVDA) and its group of chips became a net drag on the performance of the entire S&P 500 index. itself surprised investors with a solid 5.5% return.
Nevertheless, generative AI is still gaining traction and is slowly moving into real-world applications.
Abby Yoder, U.S. equity strategist at JPMorgan Private Bank, emphasized that healthcare, which is notoriously slow-moving, could be next in line for AI-driven innovation.
Despite being the only sector in the S&P 500 to boast positive annual earnings growth for the past 21 years, “the health care sector has underperformed in seven of the past eight years,” Yoder said. pointed out in a recent episode of Stocks in Translation.
But Yoder sees AI as a potential key to unlocking a much-needed transformation that could return long-term growth to the sector.
Healthcare stocks have struggled in recent years, a trend Yoder attributes to legacy constraints in old systems and obstacles that make it difficult for new technology to take hold. A complex Byzantine web of stakeholders, rules, and regulators has historically impeded large-scale AI adoption. This has the potential to address inefficiencies such as insurance approvals, manual recordkeeping, and claims management that hold back productivity.
However, there are some ripples of change. Companies like Google and Microsoft are entering this space, partnering with hospitals and startups to develop AI tools to ease this burden.
On the diagnostic side, AI is being used to streamline medical image processing, reducing the time it takes for tasks such as identifying patterns in medical data, improving both the speed and accuracy of patient care. The goal is not to eliminate human radiologists and technologists from the world, but to empower them with 21st century tools that lighten their burden and accelerate patient diagnosis and recovery.
AI proponents argue that AI does more than just reduce costs. It's about revolutionizing patient care. By using vast datasets of clinical information, AI could one day better predict patient outcomes, model care before complications occur, and predict complications and select treatments. I promise to do so.
Another big silver lining for the medical AI bull is the immense promise for drug discovery.
According to Morgan Stanley's Healthcare Forecast, Terrence Flynn, the company's head of U.S. biopharmaceutical research, says, “For every (2.5%) increase in preclinical development success rate, we will generate at least 30 additional new drugs over 10 years. There is a possibility that it will be approved.” 70 billion dollars.
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Before the long tail of promises for AI in healthcare is realized, Yoder emphasized that there are currently strong growth areas in healthcare, including strong performance in GLP-1 drugs, which will help He said that pharmaceutical stocks have reached the same level as AI. A counterpart to “The Magnificent Seven.” Yoder also pointed out that there is still a lot of potential for broader preventive care applications, especially in type 2 diabetes, despite the current treatment of diabetes and obesity.
Data from the trial looks promising. “The rate of prevention of type 2 diabetes is over 98%,” she said.
However, despite the potential of AI, there are still significant obstacles and trust remains a major challenge.
A GE Healthcare survey of 7,500 clinicians worldwide found that more than 55% of healthcare professionals believe AI is not ready for prime-time medical use. Additionally, only 26% of U.S. respondents believe that AI can be trusted, lagging behind 42% of global respondents. When you think about real-world life-and-death issues, this is a big hurdle in addition to the web of legacy technologies that need to be integrated. Much of the infrastructure, such as electronic health records, is outdated and not built for seamless AI integration.
Another area facing delays is AI-driven surgery. AI-powered robots are already assisting in remote telesurgery, but humans are still driving the buses and the concept of fully autonomous surgery is still far from reality.
Despite industry inertia and barriers to change, Yoder remains optimistic about health care's growth potential as a long-term investment. And if something happens to the economy and the Fed makes a soft landing, this sector has important advantages. It's a low-volatility, defensive large-cap space. As Yoder pointed out, not only is health care spending increasing as a percentage of GDP, but health care spending has continued to grow at a strong pace even during the recession.
In Yahoo Finance's podcast, “Stocks in Translation,” Yahoo Finance Editor Jared Blikre cuts through the market clutter, loud numbers, and hyperbole to provide important conversations and insights from across the investment landscape to help you make the right decisions. Provides the essential context needed to make decisions. your portfolio. Find more episodes on our video hub or watch on your favorite streaming service.
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