Investing in healthcare AI stocks

As artificial intelligence continues to grow, it comes as little surprise that this innovative tech finds numerous applications in the healthcare sector. Here’s what investors need to know before they buy in.

What is healthcare AI?

Healthcare AI is a subcategory of artificial intelligence: a term broadly applied to machines programmed to think like humans. And as artificial intelligence becomes increasingly prevalent in our day-to-day lives, its applications continue to grow.

Healthcare AI focuses on the use of artificial intelligence to research, treat and prevent diseases. With artificial intelligence, we can assess complex data sets, streamline medical services and make groundbreaking discoveries. In turn, these discoveries fuel the advancement of new technologies and tools in the healthcare sector.

How do I buy healthcare AI stocks?

1. Choose a stock trading platform. If you’re a beginner, our table below can help you choose.
2. Open your account. You’ll need to provide your ID, bank account information and Social Insurance Number (SIN).
3. Fund your account. Before you can start trading, you’ll need to fund your account with a bank transfer.
4. Search for stocks. Use a stock screener to sort and filter stocks.
5. Submit your order. Once you’ve found a security you’d like to buy, indicate how many you’d like to purchase and submit your order.
6. Monitor your investments. Log in to your brokerage account to track the performance of your portfolio.

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Healthcare AI stocks

Stocks in the healthcare AI industry scale from big names in artificial intelligence, like Alphabet, to niche medical device manufacturers, like Globus Medical.

What ETFs track the healthcare AI category?

There are numerous artificial intelligence ETFs, including the following:

• Horizons Robotics and Automation Index ETF (TSX: RBOT)
• Horizons Active A.I. Global Equity ETF (TSX: MIND)
• Invesco QQQ (NasdaqGM: QQQ)
• iShares US Technology ETF (B3: BIYW39.SA)
• First Trust Dow Jones Internet Index (NYSEArca: FDN)

But if you’re looking for something specific to healthcare AI, take a look at the Robo Global Healthcare Technology & Innovation (NYSEArca: HTEC). This ETF was launched in 2019 by advisory and research firm Robo Global. It tracks over 80 US stocks in healthcare and artificial intelligence from the US and around the world.

Why invest in healthcare AI stocks?

To put it bluntly, there is high growth potential. The global AI healthcare market, worth $4.9 billion in 2020, is expected to grow to $45.2 billion by 2026 at a compound annual growth rate (CAGR) of 44.9%, according to Markets and Markets.

Growth potential aside, artificial intelligence in the healthcare industry has the potential to produce lifesaving technology. AI developments in this sector can change how we identify and treat disease. And to see this in action, we need to look no further than Google’s AI research firm, DeepMind.

Investing in healthcare stocks

How DeepMind’s discovery will change healthcare

DeepMind announced in later November 2020 that its AlphaFold system had finally solved a protein folding challenge — one that had baffled and eluded the scientific community for decades. The successful passing of this protein folding test meant that AlphaFold could decipher the structure of proteins from an amino acid sequence in just a few days, a resource-intensive task that used to take years.

DeepMind’s breakthrough showcases how powerful and prevalent AI technology has and will continue to be in the healthcare industry. And this emerging trend presents an invaluable opportunity for investors seeking growth stocks.

Risks of investing in healthcare AI

One of the most critical risks facing healthcare AI stocks is competition. Companies in sectors like this — sectors on the brink of significant growth — may be vulnerable to the self-imposed volatility of a highly competitive playing field.

Investors interested in these stocks have a challenging choice to make: invest in riskier small-cap stocks that may not survive the competition, or shell out hundreds for a single share of an already-established tech giant, like Google’s parent company, Alphabet.

Another consideration is governmental regulation. Tech companies are far from immune to regulatory disputes, and as the way we interact with this type of technology continues to evolve, some companies may be forced to reconsider their approach — a potentially time and capital-intensive process.

Compare trading platforms

To invest in healthcare AI stocks, you’ll need a brokerage account. Explore your platform options by features and fees to find the account that best meets your needs.

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Name	Product	Finder Rating	Available Asset Types	Stock Trading Fee	Account Fee	Signup Offer	Table description
National Bank Direct Brokerage National Bank Direct Brokerage		Finder Rating: ★★★★★ 4.2 / 5	Stocks, Bonds, Options, Mutual Funds, GICs	$0	$0 if conditions met, or $100	Get $0 commission on all transactions with promo code: finder		Go to site View details	Compare	loading Fetching your data...
CIBC Investor's Edge CIBC Investor's Edge		Finder Rating: ★★★★★ 3.8 / 5	Stocks, Bonds, Options, Mutual Funds, ETFs	$4.95–$6.95	$0 if conditions met, or $100	N/A	An easy-to-use platform with access to a variety of tools to help you trade with confidence.	Go to site View details	Compare	loading Fetching your data...
Interactive Brokers Interactive Brokers Finder Award		Finder Rating: ★★★★★ 4.3 / 5	Stocks, Bonds, Options, ETFs, Currencies, Futures	min $1.00, max 0.5%	$0	N/A	Winner for Best Overall Broker in the Finder Stock Trading Platform Awards.	Go to site View details	Compare	loading Fetching your data...
Questrade Questrade		Finder Rating: ★★★★★ 4.3 / 5	Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, International Equities, Precious Metals	$4.95 - $9.95	$0	Get $50 in free trades when you fund your account with a minimum of $1,000.	Opt for self-directed investing and save on fees or get a pre-built portfolio to take out some of the guesswork.	Go to site View details	Compare	loading Fetching your data...
Qtrade Direct Investing Qtrade Direct Investing		Finder Rating: ★★★★★ 3.7 / 5	Stocks, Bonds, Options, Mutual Funds, ETFs, GICs	$6.95 - $8.75	$0 if conditions met, otherwise $25/quarter	Get up to $150 sign-up bonus. Use promo code BONUS150. Conditions apply. Ends June 30, 2023.	Low trading commissions and an easy-to-use platform with access to powerful tools and a wide selection of investment options.	Go to site View details	Compare	loading Fetching your data...

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Bottom line

Healthcare AI stocks have plenty of room to grow — and analysts are optimistic about this subsector’s potential. But governmental regulation coupled with a high degree of competition may threaten your investment in this category.

To invest in healthcare AI stocks, explore your brokerage account options with multiple platforms for the account best suited to your investment goals.

Frequently asked questions

• Do healthcare AI stocks pay dividends?

  Yes. Some that do include ABB (NYSE: ABB) and Thermo Fisher Scientific (NYSE: TMO).

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