Wall Street is enamoured with all things artificial intelligence (AI). Nowhere is this trend more evident than in the recent parabolic growth of graphics, computing, and networking solutions company Nvidia (NVDA -5.63%). Thanks to its central role as a pillar of global AI architecture, Nvidia has seen its market cap swell to nearly $1 trillion in 2023. For context, the graphics and cloud computing juggernaut started the year off with a far more modest market cap of approximately $350 billion. 

The impetus behind this surge in interest in AI is the simple yet powerful idea that this technology may disrupt a disparate array of industries, as well as a variety of aspects of everyday life. In the near future, for instance, AI has the potential to quicken the development of self-driving vehicles, autonomous surgical robots, factories that can churn out almost any type of good with only a handful of human workers, and more. AI is thus a potential goldmine for early investors.

AI surgery concept.

Image source: Getty Images.

Armed with this background, it's interesting to note that two healthcare titans -- Eli Lilly (LLY -2.14%) and Medtronic (MDT 0.05%) --recently inked collaboration agreements that puts them firmly in the realm of so-called "AI stocks." Here's what AI investors need to know right now. 

Eli Lilly embraces AI drug discovery

Tuesday, Lilly announced a pact with privately held XtalPi to use the company's integrated AI capabilities and robotics platform to develop novel drug candidates for an undisclosed condition. XtalPi stands to earn up to $250 million in up-front and milestone payments from the collaboration. But the size of this landmark deal is quite frankly immaterial. What does matter is that Lilly's management has clearly recognized the importance of partnering with a cutting-edge AI company to increase the efficiency and, most importantly, the speed of drug discovery. 

Drug development is notoriously costly and highly inefficient at several levels. This trial and error process frequently costs pharma companies billions in dollars and decades in lost time. Meanwhile, patients with debilitating and often terminal diseases are left to suffer. But this unfortunate situation doesn't have to be the normal course of business anymore. Speaking to this point, XtalPi's unique capabilities have already borne fruit by assisting in the accelerated development of Pfizer's life-saving COVID-19 antiviral drug Paxlovid.

Lilly, an innovation juggernaut in its own right, could be about to quietly change the game with its AI-focused drug discovery partnership with XtalPi. Perhaps the best part of this story from an investing angle is that Lilly's stock is already a strong buy, thanks to the company's robust clinical pipeline of cancer meds and metabolic disease therapies. This XtalPi partnership, in turn, is essentially an option contract on the burgeoning AI field.

Medtronic joins forces with Nvidia

Last March, medical-device giant Medtronic announced a deal with Nvidia to integrate the company's AI tech into the GI Genius intelligent endoscopy module. This system is the first FDA-approved, AI-assisted colonoscopy tool capable of detecting detect polyps that can lead to colorectal cancer. More broadly, this initial agreement could prove to be the long-awaited start of the integration of bona fide AI into cutting-edge medical devices. 

Speaking to this last point, Kimberly Powell, vice president of healthcare at Nvidia, said that this Medtronic collaboration accelerates "AI innovation by enabling a software-defined business model, with the goal of improving clinical decision-making, reducing medical variability, and driving better patient outcomes." The key takeaway, in turn, appears to be that this endoscopy module will probably be the first of many AI-assisted medical devices to emerge from this Medtronic-Nvidia collaboration. Time will tell.

Like Lilly, Medtronic stock screens as a solid buy even without this AI angle. The medical-device company has raised its dividend for 46 consecutive years, it sports a rock solid balance sheet, and it holds entrenched positions in multiple high-growth markets like cardiovascular and diabetes care devices. Hence, this AI venture with Nvidia is simply one more reason to buy this top dividend, value, and growth stock.