Enthusiasm for the artificial intelligence (AI) investment theme blossoms. Astute market participants can evaluate industry-level adoption trends, and how to enhance other disruptive trends with AI.
One of the epicenters of increased AI adoption is likely to be healthcare. Over the long-term, that could be beneficial to exchange traded funds with significant AI exposure. That group includes the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM), both of which are setting torrid paces in 2023 due in large part to impressive holdings-level AI credentials.
The convergence of AI and healthcare is important because it adds to the list of industries where AI is relevant. This list includes, for example, cloud computing, cybersecurity, financial services and many more. Point is, the wider the playing field for AI deployment, the broader the potential investment implications are.
Healthcare Ripe with Opportunity for AI
The QQQ and QQQM AI holdings could, over time, find healthcare to be a lucrative field.
“When it comes to the healthcare sector, it’s still early but we believe artificial intelligence and machine learning adoption is poised to accelerate significantly,” noted Terence Flynn, Morgan Stanley’s Head of U.S. BioPharma Research. “The biopharma industry specifically is moving to unlock the potential of A.I across multiple areas, including drug discovery, clinical development, manufacturing and physician patient engagement.”
There are multiple avenues for healthcare adoption perks. Therefore, this adds to the allure of QQQ and QQQM AI holdings.
“We see two broad areas where A.I enabled investments in drug development could drive significant value in the biopharma space,” added Flynn. “One is direct cost savings, so think of improved R&D margins, for example. And two is increased probability of success of pipeline programs. Here we estimate that even small improvements in the probability of success could drive significant value.”
AI applications in the healthcare realm extend beyond biopharma. This, therefore, enhances the convergence of the two fields, and potentially the investment implications for QQQ and QQQM. For example, AI could play a pivotal role in diagnostics and improving overall quality of patient care.
“A.I tools have predictive capabilities that could be used for early diagnosis and detection of disease, which could lead to improved clinical outcomes and patient experience and reduce the cost of care over time. Many health systems have already begun to migrate data from on premises to the cloud, an important step for capturing the full benefits of A.I.,” concluded Flynn.
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