We recently compiled a list of the 10 best healthcare AI companies, and in this article, we'll take a look at how Teladoc Health, Inc. (NYSE:TDOC) ranks against other healthcare AI companies.
The Need for AI in Healthcare
Typically, when we hear the term “artificial intelligence,” we immediately think of semiconductors and big tech companies that are reaping huge profits from the AI boom. But technology isn’t the only industry that stands to benefit greatly from the rise of AI. In fact, the healthcare industry may be the one to benefit most from the AI revolution. The United States has been plagued by a severe shortage of healthcare workers for years, and in 2022, the American Medical Association reported that by 2034, the United States could face a shortage of 17,800 to 48,000 primary care physicians and 21,000 to 77,100 non-primary care physicians. These shortages stem from a tight labor market and fewer doctors and nurses graduating. This unavoidable reality has plagued the healthcare sector for quite some time, but AI could be a transformative technology that can help mitigate some of the effects of these shortages.
The main areas of healthcare that are set to 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 discuss how the company is incorporating AI into its products and how he expects AI to impact healthcare delivery in the future. Below are some of his comments:
“We do a combination of in-house development and partnering with people who may have specific ideas. At the end of the day, when you think about the big picture, what we're seeing is an overcrowded and overworked healthcare workforce, technological advances, and at the most core level, huge disparities in care. So people are interpreting things very differently, and the ability to bring all of this together using AI is what I think is going to be the magic in raising the level of healthcare and treatment overall. So it's about taking the lowest common denominator and raising it so much higher.”
On the specific problems that AI is solving in healthcare, McMillan said:
“When you really think about it, it really is a combination of things. In radiology, what machine learning and AI can do is help radiologists get images faster, see them more clearly, and make diagnoses faster than they could see them themselves. We're reducing false positives, increasing our ability to eliminate all of the callbacks and other work, and detecting more cancers.”
According to McMillan's insights, the US healthcare industry has long been plagued by problems resulting from overwork and a shrinking workforce, but with the rise of more efficient technologies in healthcare, it is clear that the industry is finally able to compensate for the consequences of these issues. As a result, medical AI companies are becoming increasingly popular among investors today. Therefore, we have compiled a list of these companies below, including the best healthcare stocks to buy under $50 and the best medical device stocks to buy right now.
Our Methodology
We combed online rankings and healthcare ETFs to find the medical AI stocks that made it onto the list. Stocks are ranked from least to most based on the number of hedge funds that own the stock.
Why are we interested in stocks that hedge funds are concentrated in? The reason is simple: our research shows that you can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small and large stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points. (Learn more here)
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Doctors in masks and white coats provide remote medical advice via video chat.
Teladoc Health, Inc. (NYSE:TDOC)
Number of hedge fund holders: 35
Market cap: $1.3 billion
Teladoc Health, Inc. (NYSE:TDOC) is a healthcare technology company based in Purchase, New York that provides virtual care services, enabling technology and telehealth solutions to hospitals and health systems.
In late 2023, Teladoc Health, Inc. (NYSE:TDOC) partnered with Microsoft to integrate ambient clinical documentation technology into its Solo virtual care platform and integrated Microsoft Azure's OpenAI services into Teladoc Health Solo. The company's Q2 2024 earnings call also noted that Teladoc Health, Inc. (NYSE:TDOC) continues to invest heavily in data science and AI to meet the evolving needs of its customers and the health system.
Teladoc Health, Inc. (NYSE:TDOC) currently uses around 60 proprietary AI models for a variety of tasks, including connecting patients with the right healthcare provider. The increased use of AI in its telehealth business will ensure that Teladoc Health, Inc. (NYSE:TDOC) maintains its position as a leader in the telehealth market.
Teladoc Health, Inc. (NYSE:TDOC) was in 35 hedge funds' portfolios during the second quarter with total holdings of $339.7 million.
Overall, TDOC ranks #5 on our list of Best Medical AI Companies. While we acknowledge TDOC's growth potential as an investment, we believe some AI stocks have a much higher chance of delivering higher returns in the short term. If you're looking for AI stocks with more promise than TDOC but trading at less than 5x stock price, check out our report on the cheapest AI stocks.
Read next: The $30 Trillion Opportunity: The 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and NVIDIA Has “Become a Wasteland” According to Jim Cramer.
Disclosures: None. This article was originally published on Insider Monkey.
