We recently published a list of The 10 best companies for medical AI. In this article, we take a look at how Stryker Corporation (NYSE:SYK) compares to other medical AI companies.
The need for AI in healthcare
Generally, when you hear the term “artificial intelligence,” you immediately think of semiconductors and big tech companies that have made huge profits due to the AI boom. However, the tech industry is not the only industry that is set to make big profits due to the rise of AI. In fact, the healthcare industry could benefit the most from the AI revolution. The U.S. has been battling a massive shortage of healthcare professionals for years. The American Medical Association reported in 2022 that the U.S. could face a shortage of 17,800 to 48,000 primary care physicians and 21,000 to 77,100 non-primary care physicians by 2034. This shortage is due to the tight labor market and the reduced number of physician and nurse graduates. This inescapable reality has plagued the medical field for quite some time, and AI could be the revolutionary technology that helps alleviate some of the consequences of this shortage.
The key areas in healthcare that will benefit from the rise of AI are robotics, medical devices, and drug discovery.
AI is expected to transform healthcare
On June 4, Hologic CEO Steve MacMillan appeared on CNBC’s “Squawk on the Street” to talk about how his company is integrating AI into its products and the impact AI will have on healthcare in the future. Here are some of his comments:
“We’re combining internal developments and in certain cases working with people who may have specific ideas. You know, when you look at the big picture, ultimately we see an overburdened or overworked healthcare workforce, advancing technologies and, at the core, very large disparities in care at the highest level. So people are getting very different assessments and the ability to bring all of that together using AI, I see as the magic to really raise the level of healthcare and treatment across the board. So you take the lowest common denominator and bring it up significantly.”
On the specific problems AI solves in healthcare, MacMillan said:
“If you think about it, it’s really a little bit of everything. In radiology … machine learning and AI can help the radiologist get to the image faster and see it more clearly than they would have been able to on their own, and then make a diagnosis faster. We’ve reduced the number of false positives, we’ve also improved the ability to avoid all those recalls and everything else, and are detecting more cancers.”
According to MacMillan’s findings, it is quite clear that the healthcare sector in the US has been suffering from the problems arising from an overworked and dwindling workforce for years, but with the advent of more efficient technologies in medicine, the sector is finally able to offset the consequences of these problems. As a result, medical AI companies are becoming increasingly popular among investors today. For this reason, we have compiled a list of these companies below, including some of the The best healthcare stocks to buy under $50 and some of the The best medical device stocks to buy now.
Our methodology
We combed through online rankings and healthcare ETFs to find medical AI stocks for our list. Stocks are sorted by the number of hedge funds that own shares in them, from lowest to highest.
Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (Further details can be found here).
A medical team wearing surgical masks and gloves performs an operation to replace a hip or knee joint using surgical navigation systems.
Stryker Corporation (NYSE:SYK)
Number of hedge fund owners: 53
Market capitalization: $134.6 billion
Stryker Corporation (NYSE:SYK) is a medical equipment provider based in Portage, Michigan. The company uses both AI and machine learning in its platforms and operations.
In 2022, Stryker Corporation (NYSE:SYK) used AI for surgery preparation and patient monitoring. In August of this year, the company also announced the acquisition of care.ai, a private company specializing in providing AI-powered virtual care workflows, smart room technology, and ambient intelligence solutions. With this acquisition, Stryker Corporation (NYSE:SYK) aims to strengthen its growing healthcare IT offerings and its portfolio of wirelessly connected medical devices.
Stryker Corporation’s (NYSE:SYK) focus on AI in medicine is expected to help the company fill an existing gap in the medical field, as nursing shortages, retention issues, and staff overwork currently plague the healthcare industry. Through AI-focused moves such as the acquisition of care.ai, Stryker Corporation (NYSE:SYK) aims to provide its customers with an enterprise-wide ecosystem that enables dynamic clinical workflows and drives the development of smart care facilities. Such moves also enabled the company to raise its full-year 2024 guidance. For example, in Stryker Corporation’s (NYSE:SYK) second-quarter earnings call, expectations for organic sales growth were raised from 9% to 10%.
In the second quarter, 53 hedge funds were invested in Stryker Corporation (NYSE:SYK), with a total share value of $4.03 billion.
Baron Funds mentioned Stryker Corporation (NYSE:SYK) in its Q1 2024 investor letter:
“We also acquired Surgery Partners, Inc., a leading operator of outpatient surgery centers, and Stryker Corporation (NYSE:SYK), a large diversified medical device company. We believe Surgery Partners should benefit from a multi-year trend of surgical procedures moving from inpatient hospitals to outpatient centers. Stryker reported strong fourth quarter financial results highlighted by 11.5% organic revenue growth, and management provided solid guidance for 2024, expecting organic revenue growth of 7.5% to 9.0% and double-digit EPS growth.”
Total SYK 2nd place on our list of the best medical AI companies. While we recognize SYK’s growth potential as an investment, we believe some AI stocks hold promise to deliver high returns and do so within a shorter time frame. If you’re looking for an AI stock that is more promising than SYK but trades at less than 5x earnings, read our report on the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.
