The rise of artificial intelligence technology has created opportunities to optimize the way heath care professionals operate. AI can potentially be used to prevent disease, detect and diagnose conditions, perform procedures, monitor patients, design and prescribe drugs, and conduct a range of other health care tasks.
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AI can analyze health care data and help uncover patterns and insights that humans are incapable of finding. Health care organizations can even use AI to make better business decisions and improve their services.
Here are eight of the best AI health care stocks to buy, according to Bank of America:
| Stock | Implied upside over July 28 closing price |
| Exscientia PLC (ticker: EXAI) | 106.7% |
| Certara Inc. (CERT) | 40.9% |
| Relay Therapeutics Inc. (RLAY) | 161.7% |
| BioXcel Therapeutics Inc. (BTAI) | 140.1% |
| Royalty Pharma PLC (RPRX) | 44.1% |
| Alphabet Inc. (GOOG, GOOGL) | 10.1% |
| Amazon.com Inc. (AMZN) | 16.5% |
| International Business Machines Corp. (IBM) | 11.5% |
Exscientia PLC (EXAI)
Exscientia is an early stage biotechnology company developing oncology, immunology and other treatments. The company has a sophisticated AI-enabled drug discovery program that it hopes can reduce the cost and timeframe of new drug development. Analyst Alec Stranahan says Exscientia is benefiting from the AI trade that has swept Wall Street. In May, the company dosed the first patient in its lead program EXS21546, an AI-designed cancer treatment. Stranahan says investors can expect clinical updates to validate Excientia’s AI technology in the next year or so. Bank of America has a “buy” rating and $16 price target for EXAI stock, which closed at $7.74 on July 28.
Certara Inc. (CERT)
Certara specializes in biosimulation, a technique for using software to model and conduct clinical trials to improve the drug discovery process. In January, Certara acquired AI health care and deep learning software company Vyasa Analytics LLC. Analyst Michael Ryskin says Certara is a market leader in biosimulation and has long-term growth drivers ahead, including secular growth in pharmaceutical research and development spending. Ryskin says Certara has a massive addressable market. He says the company’s fiscal 2023 financial guidance is achievable and projects double-digit earnings and revenue growth in coming years. Bank of America has a “buy” rating and $27 price target for CERT stock, which closed at $19.16 on July 28.
Relay Therapeutics Inc. (RLAY)
Relay Therapeutics is a clinical-stage biopharmaceutical company focused on developing cancer treatments. In 2021, Relay acquired ZebiAI, an AI technology company that applies machine learning to DNA-coded libraries to identify small molecules that bind to a protein. Analyst Jason Gerberry says the key for Relay’s medium-term outlook will be the company’s two clinical-stage cancer treatments, RLY-4008 and RLY-2608. Bank of America has a “buy” rating and $32 price target for RLAY stock, which closed at $12.23 on July 28.
BioXcel Therapeutics Inc. (BTAI)
BioXcel Therapeutics is a commercial-stage biopharmaceutical company that uses AI technology to discover therapies that can be repurposed for new targets or new delivery methods. The stock took a big hit in June when BioXcel disclosed trial conduct issues in its lates-stage testing of BXCL501 for treating agitation associated with Alzheimer’s disease in assisted living facilities. BioXcel shares are down 55.4% this year through July 28, but analyst Greg Harrison says the sell-off is a buying opportunity given the conduct issues did not affect trial data. Bank of America has a “buy” rating and $23 price target for BTAI stock, which closed at $9.58 on July 28.
[READ: 10 Best Tech Stocks to Buy for 2023]
Royalty Pharma PLC (RPRX)
Royalty Pharma is a biopharmaceutical royalty acquisition company that has invested over $20 billion in more than 50 different royalty deals since its inception in 1996. The company provides a diversified way to invest in biotechnology innovation at smaller companies, including AI technology. Analyst Geoff Meacham says Royalty’s interests are highly diversified, reducing overall risk. In addition, Meacham says Royalty’s capital-light business model facilitates net margins of above 70%. Finally, the company’s model also reduces development-related risk because it can choose investments based on available data. Bank of America has a “buy” rating and $45 price target for RPRX stock, which closed at $31.23 on July 28.
Google and YouTube parent company Alphabet uses AI and automation in virtually every facet of its business, from ad pricing to content promotion to Gmail spam filters. The company’s Google Health business develops and tests AI that can be used to increase the availability and accuracy of health care technologies and alleviate global physician shortages. Analyst Justin Post says Alphabet’s impressive second-quarter earnings beat could ease investor concerns that the company is falling behind competitor Microsoft Corp. (MSFT) in the AI technology arms race. Bank of America has a “buy” rating and $146 price target for GOOGL stock, which closed at $132.58 on July 28.
Amazon.com Inc. (AMZN)
Like Alphabet, Amazon has integrated AI into every aspect of its business, including targeted advertising, e-commerce search algorithms and Amazon Web Services. AWS recently unveiled a portfolio of new AI products, including its HealthScribe summarizing tool that helps health care providers summarize doctor visits. Amazon is investing heavily in AI technology, and Post says it is well positioned in key growth markets, including cloud computing, online advertising and connected devices. He says accelerating AWS growth and improving retail margins could drive earnings multiple expansion for the stock. Bank of America has a “buy” rating and $154 price target for AMZN stock, which closed at $132.21 on July 28.
International Business Machines Corp. (IBM)
For years, IBM has been developing ways to adapt its AI supercomputer Watson to revolutionize health care, finance, law and academia. IBM sold its Watson Health business to Francisco partners in 2022, but the company is still working to use AI technology to improve patient care and operational efficiency in the health care market. On top of its attractive 4.6% dividend, analyst Wamsi Mohan says IBM has a defensive business and an underappreciated AI portfolio. Mohan anticipates IBM’s revenue growth and free cash flow will continue to rebound. Bank of America has a “buy” rating and $160 price target for IBM stock, which closed at $143.45 on July 28.
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AI in Health Care: 8 Best Stocks to Buy originally appeared on usnews.com
