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Investing in healthcare AI stocks

Investors have the opportunity to back lifesaving tech, but stocks can be volatile.

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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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  • $1,200 cash reward or $1,200 Apple gift card
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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.

  • Alphabet Inc. (NasdaqGS: GOOG)
  • Intuitive Surgical, Inc. (NasdaqGS: ISRG)
  • Butterfly Network, Inc. (NYSE: BFLY)
  • Recursion Pharmaceuticals, Inc. (NasdaqGS: RXRX)

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
Interactive Brokers
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CIBC Investor's Edge
Finder Score:
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Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, Precious Metals, IPOs
$0 if conditions met, or $100
100 free trades + up to $4,500 cash back with Premium Edge
An easy-to-use platform with access to a variety of tools to help you trade with confidence.
RBC Direct Investing
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Stocks, Bonds, Options, Mutual Funds, ETFs, GICs
$6.95 - $9.95
$0 if conditions met, otherwise $25/quarter
Enjoy no minimum trading activity requirements and pay just $9.95 per trade or $6.95 if making 150 trades per quarter.
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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

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga. See full bio

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