ZACKS·2026-01-05 13:45Core Insights - The medical sector is rapidly adopting artificial intelligence (AI), significantly transforming diagnostics, treatment, and operational efficiency in 2024 [1] - AI-powered diagnostics have become central to enhancing accuracy and speed in medical practices [1] Group 1: AI Adoption in Healthcare - The healthcare sector is typically defensive, characterized by low-beta and dividend-paying stocks, but AI has turned several stocks into potential high-growth providers [2] - Key stocks benefiting from AI integration include Eli Lilly and Co. (LLY), Medtronic plc (MDT), Intuitive Surgical Inc. (ISRG), Regeneron Pharmaceuticals Inc. (REGN), and Johnson & Johnson (JNJ) [2] Group 2: Eli Lilly and Co. (LLY) - Eli Lilly focuses on cardiometabolic health, neuroscience, oncology, and immunology, which are high-growth areas with significant commercial potential [5] - Strong demand for LLY's GLP-1 drugs, Mounjaro and Zepbound, is driving top-line growth, supported by international market launches and increased production [6] - LLY is advancing its pipeline in obesity and diabetes, with an oral GLP-1 obesity pill expected to launch next year [7] - The company is collaborating with OpenAI and investing in AI-driven biotech initiatives, including a $409 million investment in Genetic Leap [9] - LLY has an expected revenue growth rate of 22.3% and earnings growth rate of 41.3% for the current year, with a beta of 0.35 and a dividend yield of 0.6% [9][10] Group 3: Medtronic plc (MDT) - Medtronic is integrating AI into its surgical systems and endoscopy to enhance patient care and operational efficiency [11] - The GI Genius project uses AI algorithms to detect colorectal polyps during colonoscopies, improving cancer survival rates [12] - MDT's partnerships leverage AI to optimize cardiac procedures and improve diagnostic precision, positioning the company for growth in medtech innovation [13] - Medtronic has an expected revenue growth rate of 7.5% and earnings growth rate of 2.7% for the current year, with a beta of 0.71 and a dividend yield of 3% [15] Group 4: Intuitive Surgical Inc. (ISRG) - Intuitive Surgical is embedding AI and digital tools into its robotic ecosystem, enhancing surgical performance metrics [16] - The company is piloting telecollaboration through Intuitive Telepresence, allowing remote surgical support [17] - ISRG has an expected revenue growth rate of 14.3% and earnings growth rate of 11.1% for the current year, with a beta of 0.39 and an ROE of 15.1% [20] Group 5: Regeneron Pharmaceuticals Inc. (REGN) - Regeneron utilizes AI and machine learning for drug target identification, clinical trial optimization, and precision medicine [21] - The company has seen revenue growth driven by strong performance from drugs like Eylea HD and Dupixent, despite declining sales of its lead drug [22] - REGN has an expected revenue growth rate of 4.9% and earnings growth rate of -0.4% for the current year, with a beta of 0.39 and a dividend yield of 0.5% [24] Group 6: Johnson & Johnson (JNJ) - Johnson & Johnson's MedTech division applies AI technologies for surgical robotics and digital surgery analytics [25] - The company has developed the Ottava robotic surgery platform and the Caresurgical/VELYS digital surgery systems, enhancing procedure planning and real-time data sharing [26] - JNJ has an expected revenue growth rate of 5% and earnings growth rate of 5.7% for the current year, with a beta of 0.34 and a dividend yield of 2.5% [27]