Artificial intelligence (AI) is hotter than ever thanks in large part to the intense interest sparked by OpenAI's ChatGPT. Interestingly, though, total private investment in AI decreased by nearly 27% in 2022, according to Stanford University's latest AI Index Report.
However, last year's overall private AI investment of $91.9 billion was still the second-highest amount dedicated to it in history. And one sector stood out above all others with $6.1 billion in investments -- healthcare.
The healthcare sector should provide a huge opportunity for investors in the years to come. Here are three top stocks to buy now to profit from the AI boom.
1. Alphabet
Don't underestimate Alphabet (GOOG -1.96%) (GOOGL -1.97%) in the AI race. The company is poised to be a huge winner with generative AI. But there are several reasons why it could especially profit from the increasing adoption of AI in healthcare.
The company's Google Cloud unit ranks as one of the fastest-growing cloud services providers. Many leading healthcare organizations and companies already use Google Cloud, including the American Cancer Society, Cardinal Health, McKesson, and Moderna. Expect Google Cloud's AI tools to attract even more healthcare customers in the future.
Alphabet could have a true game-changer on its hands with another AI system focused on healthcare. Its DeepMind subsidiary developed AlphaFold, which can accurately predict the shapes that proteins will fold into based on the strings of amino acids that make them up -- an enormously complex task. This breakthrough could play an important role in developing new medicines and understanding biological processes.
In addition, some of Alphabet's famous "other bets" companies are using AI to make healthcare advances. Verily incorporates AI into its research in developing tools to improve healthcare outcomes. Calico uses AI in its quest to extend the human lifespan. Venture capital unit CapitalG invests in businesses that use AI in healthcare, notably including Applied Systems, Oscar Health, and Practo.
2. Intuitive Surgical
Intuitive Surgical (ISRG -0.50%) doesn't have the long list of AI credentials that Alphabet does. However, the robotic surgical systems maker thinks that AI offers tremendous opportunities to improve minimally invasive surgery.
One area that Intuitive is exploring is using AI to help train medical students and residents more quickly. That's a biggie considering the worsening physician shortage in this country. The company also believes that AI could potentially be used to help select the best patient candidates for surgery, as well as to predict which surgical approaches hold the greatest likelihood of success for each patient. Over time, Intuitive even anticipates that AI could give surgeons real-time input while they're operating.
No company is in a better position to make all of this a reality than Intuitive Surgical. More than 7,500 of Intuitive's da Vinci robotic surgical systems are deployed worldwide. Over 11 million surgical procedures have been performed with the systems so far, giving the company a massive amount of data to use in training AI systems.
It's telling when the best-performing hedge fund in the world loads up on a stock. That's exactly what Ken Griffin's Citadel Advisors did in 2022's fourth quarter with Intuitive Surgical. Griffin and his team no doubt see the long-term potential that Intuitive offers.
3. AbCellera Biologics
Alphabet and Intuitive Surgical are well-established, highly profitable companies that aim to take advantage of the power of AI to improve healthcare. But if you're looking for a more speculative pick that has the potential to be a multibagger, check out AbCellera Biologics (ABCL -6.92%).
What's the connection between this biotech company and AI? AbCellera uses AI to speed up the discovery of antibodies that can be used in developing new drugs. The company's goal is to be two times faster at advancing antibody therapies into the clinic than its rivals.
AbCellera already has plenty of partners. Eli Lilly used the biotech's antibodies to bring COVID-19 therapies bamlanivimab and bebtelovimab to market. Other collaborators include AbbVie, Denali Therapeutics, Gilead Sciences, and Moderna.
The biotech's pipeline features eight clinical programs. AbCellera has 131 discovery programs under contract with 69 already started. It has another 17 co-development programs under contract, six of which have already started. This company could grow much bigger if only a small fraction of its antibodies prove to be safe and effective.
