Artificial intelligence (AI) has been a hot topic this year with ChatGPT growing in popularity and people using the chatbot for a broad range of queries -- and even, in some cases, to help do their work for them, such as writing essays or coding.
There's a lot of potential for AI to help improve various processes. And one company that is jumping on the bandwagon is Doximity (DOCS -1.34%). Its platform focuses on making work for physicians more efficient, and it sees AI as playing a big role in that goal.
Doximity launches DocsGPT
In February, Doximity launched a beta version of a service called DocsGPT. In integrates with ChatGPT and allows doctors to streamline their operations.
At DocsGPT.com, users can see some of the things it can do, including write letters of recommendation, thank-you notes for referrals, and even post-colonoscopy instructions.
One of the challenges will be to ensure that things like instructions to patients are accurate. But the potential is clearly there for Doximity and other healthcare companies to take advantage of the growing opportunities in AI to make their platforms as attractive as they can be.
Doximity says that 80% of doctors use its networking platform, and so keeping them happy and satisfied with the site is crucial. And by staying on top of the latest trends, that puts Doximity in a great position to show that it is focusing on patient and physician needs.
Some physicians have said that using DocsGPT could save them up to two hours per day in administrative work. While it's still early, if that's an accurate gauge of its effectiveness, it could lead to more doctors using Doximity and spending more time on it.
The AI market in healthcare has massive potential
As with many parts of the economy, AI can significantly transform industries. Analysts from Fortune Business Insights see this as being a hot growth area, projecting that the global market for AI in healthcare could be worth more than $164 billion by 2029, growing at a compound annual rate of 42.4% until then. Using virtual assistants and robotic-assisted surgery are some examples of how AI may change the industry in the long haul.
Doximity is already a fast-growing business
Doximity's growth is strong, but it has been slowing down in recent quarters as companies have been scaling back on ad spend due to fears of a recession looming. The bulk of its revenue comes from subscriptions, which center around marketing and hiring solutions.
However, even with the declining growth rate, Doximity's sales totaled $115.3 million last quarter (ending Dec. 31) and were up by 18%.
DOCS revenue (quarterly YoY growth) data by YCharts. YoY = year over year.
Doximity's growth rate could recover if macroeconomic conditions improve. Plus, the rollout of DocsGPT could serve as an additional catalyst should it be successful in drawing in more doctors to the platform.
Should you buy Doximity stock today?
In the past 12 months, Doximity's stock has nosedived 44%. But even with the drop, it's trading at a pricey 60 times earnings and 18 times revenue.
Although the business looks to be in solid shape, I wouldn't buy Doximity's stock at its current valuation, especially since inflation remains high and the economy could be facing a recession this year, which could put more pressure on the company's growth.
News of DocsGPT and what it can do for doctors is encouraging, but I'd wait to see what kind of an impact it has on the company's financials before deciding whether that's enough of a reason to pay a significant premium for this healthcare stock.
