These are trying times for the health care technology industry, but a turnaround may be on the way for investors who have patience.
The benchmark Global X HealthTech ETF (ticker: HEAL), an exchange-traded fund, is down 16.6% year to date and 24% over the past year as of May 18, leaving thematic investors very much under a cloud.
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Yet, slivers of sunlight are settling over the medtech sector this spring, with a rosy prognosis for the market. In 2025, the global artificial intelligence in health care market size clocked in at about $36.7 billion, and it is pegged to reach $505.6 billion by 2033, according to Grand View Research. That represents a healthy compound annual growth rate, or CAGR, of 38.9%. Driving market growth is the increasing demand in the health care sector for enhanced efficiency, accuracy and better patient outcomes.
Industry analysts say AI-fueled health care stocks are in particularly good position for mid-2026. In its “State of Health AI 2026” report, Bessemer Venture Partners notes that health tech stocks, despite hardy financial numbers and robust metrics that “rival or exceed those of high-growth software companies,” still trade at a 10% to 20% discount to their tech-sector counterparts. This is regardless of stronger underlying business metrics in new health tech stocks, which have double the revenue growth and free-cash-flow margins of their high-growth counterparts in software, according to the report.
Bessemer makes the point that health tech companies are “still earning back trust” after some early AI stumbles. “But here’s what the skeptics are missing,” Bessemer says. “This time is fundamentally different. AI is transforming health care technology from workflow tools into mission-critical infrastructure that drives both revenue growth (and) margin expansion and, most excitingly, better clinical outcomes.”
Other market experts agree. “AI is becoming more integrated into health care operations because the industry is under pressure to improve efficiency while managing staffing shortages, administrative complexity and rising costs,” says Osman R. Minkara, founder and managing director of CIG Capital Advisors. “Areas like diagnostics, workflow automation, data management and patient scheduling are seeing increased adoption because health care systems are looking for ways to operate more effectively at scale.”
With AI powering so many much-needed tailwinds right now, which sector stocks make the most sense for investors in 2026? These eight names are worth a closer look:
| Stock | Upside Potential* |
| Hims & Hers Health Inc. (HIMS) | 29.7% |
| Alphabet Inc. (GOOG, GOOGL) | 11.1% |
| Amazon.com Inc. (AMZN) | 19.9% |
| Eli Lilly and Co. (LLY) | 27.8% |
| Tempus AI Inc. (TEM) | 49.4% |
| Stryker Corp. (SYK) | 25.0% |
| Boston Scientific Corp. (BSX) | 56.5% |
| GE Healthcare Technologies Inc. (GEHC) | 33.9% |
*Based on share price at May 18 market close and consensus price target of Wall Street analysts monitored by TipRanks rating tables.
Hims & Hers Health Inc. (HIMS)
This San Francisco-based telehealth services company has seen its stock rise by more than 40% over the past three months, after an initially sour start to 2026.
The company didn’t exactly set Wall Street on fire in its most recent quarter. It reported a first-quarter loss of 40 cents per share, far below the 3-cent profit consensus. Even though revenues rose by 3.7% for the same quarter, to $608 million, analysts were disappointed with that, too.
On the upside, Hims & Hers expects second-quarter revenue to land between $680 million and $700 million, well above the $643 million cited by market analysts.
The company raised some eyebrows with a May 18 move to issue $350 million or more in convertible senior notes maturing in 2032. Hims & Hers expects to use the funds to help cover the costs of its recent purchase of Eucalyptus, which is set to close in mid-2026. It will also use the cash to fuel its ongoing surge in tech spending, especially on AI tools to streamline and improve its customer engagement channels.
Alphabet is the parent company behind Google and YouTube. The company’s Google for Health platform uses generative AI to provide health information to users, and its AlphaFold model supports scientists conducting research on proteins to develop vaccines, treat tuberculosis and discover new drugs.
GOOG is having a solid 2026, with its share price up over 25.4% year to date as of May 18, and up 135.6% over the past year.
The company is nearing a $5 trillion market cap, a testament to the tech giant’s stature on the corporate world stage. That figure is impressive enough on its own, but it’s been only about 90 days since Alphabet crested the $4 trillion market cap level, suggesting the company’s massive $180 billion to $190 billion AI investment earmarked for 2026 (after pouring $28 billion into AI in Q4 2025) should really pay off for Google and its shareholders. The cash is expected to be steered toward the company’s ongoing computer infrastructure, data centers and generative AI models.
So far, so good. Google Cloud raked in $20 billion in the first quarter of 2026, boosted by rising demand for the company’s enterprise AI. Google Cloud’s order backlog and AI contracts stand at $460 billion, about twice the amount in the previous quarter.
Big investors are taking notice. Berkshire Hathaway Inc. (BRK.B) has pushed its GOOG share load from 17.8 million shares at the end of 2025 to about 58 million shares by March 31. That alone should grab other investors’ attention.
Amazon.com Inc. (AMZN)
Funding-wise, Amazon is no slouch, as the digital retail and cloud computing behemoth aims to spend $200 billion on AI initiatives in 2026. The company has also embarked on a potential $25 billion total investment in AI powerhouse Anthropic and has greenlit $50 billion for new AI infrastructure for Amazon Web Services and its GovCloud clientele.
Amazon has opportunities similar to Alphabet’s in AI-driven businesses, such as cloud computing, targeted advertising and search engines. However, the company has also invested in health care; for instance, AWS HealthScribe lets users automatically generate clinical notes from patient-clinician conversations using generative AI. Amazon also acquired One Medical for $3.9 billion in 2023 to expand its market share in the health care industry.
Currently trading around $265 per share, the consensus price target from 39 top Wall Street analysts is $317.54, indicating 19.9% potential upside.
Eli Lilly and Co. (LLY)
Headquartered in Indianapolis, Eli Lilly is having a tepid year performance-wise, with shares down about 8% year to date, but the stock has rallied by 9% over the past month, making up some ground in its seemingly never-ending effort to keep pace with Novo Nordisk A/S (NVO) in the diabetes and weight-loss drug market. Lilly is a pharmaceutical company that provides various drugs and health care services. Mounjaro, the company’s alternative to Novo Nordisk’s Ozempic, has been a big revenue driver over the past few quarters. Zepbound, another weight-loss drug, has also contributed to the company’s revenue and profits.
On the AI front, Lilly has invested about $3.75 billion in the technology, with $1 billion earmarked for a co-innovation lab with Nvidia Corp. (NVDA) to develop models for drug discovery and turn AI from an advisory tool into a decision-making tool along multiple research and development stages. Lilly also partnered with OpenAI last year to discover novel medicines, stating that this partnership “underscores our commitment to addressing significant health challenges experienced by people around the world.”
So far, market experts say Lilly is on the right track with its AI deployment. “Eli Lilly is using AI across drug discovery, clinical development, manufacturing and commercial analytics,” says William Soliman, founder at White Manna Capital Partners. “Its share price strength is still mainly driven by obesity and diabetes drugs, but AI can help Lilly shorten development timelines and improve productivity over time.”
Tempus AI Inc. (TEM)
Trading at $44 per share and down roughly 25% year to date, Tempus AI is building a reputation as a health care precision data specialist that uses artificial intelligence to advance precision medicine and patient care. It’s a companion to physicians, as its AI-powered insights can find details that professionals may miss. Tempus AI does most of its work around cancer, but it is expanding into cardiology, infectious diseases and neurological disorders. The end result is personalized treatments.
Tempus AI’s recipe for success is working just fine, as revenue soared by 83% in 2025, to $1.3 billion. Contract values are also robust, at about $1 billion so far in 2026, and revenue was up 36% in the first quarter.
The company is also courting top-tier partners, linking arms with Bristol-Myers Squibb Co. (BMY) to deploy AI-powered data to improve technical processes and regulatory success across five initial clinical trial programs. “Our collaboration with BMS aims to optimize clinical development by peering deeper into patient biology than ever before,” states Ryan Fukushima, CEO of data and apps at Tempus AI. “Our multimodal data library allows us to connect the dots between clinical records and molecular subtypes.”
Heavy hitters back the stock, despite its share-price slide in 2026, with Ark Invest’s Cathie Wood buying nearly 163,000 shares of TEM on May 11.
Even so, take some caution with the stock, as Tempus AI is a higher-risk, higher-upside pick, Soliman said. “It’s one of the few public companies where AI is central to the business model, especially in oncology, genomics and real-world data.”
[Read: 5 Top Laser Photonics Stocks for 2026]
Stryker Corp. (SYK)
This medical device and equipment provider, whose goods are used for more than 150 million patients each year, is on the right track in 2026, posting a solid $745 million in profits in the first quarter. That’s up from $654 million in the same quarter one year ago.
Stryker was rocked by a sizable cyberattack last March, which hit its global Microsoft systems, but the company seems to have recovered quickly. While some hospitals reported some data transmission snafus, Stryker’s large-scale data operation was “not impacted and safe to use,” the company reported.
The company uses AI to streamline its workflow, reduce human error and boost productivity. Stryker’s acquisition of Care.ai in August 2024 bolstered its position in AI health care, as Care.ai offers smart-room technology, ambient-intelligence solutions and AI-assisted virtual care workflows.
Analysts largely back the stock, with Bank of America Securities analyst Travis Steed recently holding a “buy” rating on SYK with a $391 price target, representing about 24% potential upside. On May 1, Barclays’ Matt Miksic issued a “buy” call on SYK as well with a $394 price target. The stock is trading around $316 per share as of mid-May.
Boston Scientific Corp. (BSX)
Marlborough, Massachusetts-based Boston Scientific has been delivering innovative health care products and services for almost 50 years. Recently, it’s also shown confidence in its own stock with a $2 billion accelerated share-repurchase agreement with JPMorgan Chase & Co. (JPM). That effort is part of the medtech company’s $5 billion stock-buyback program, the company announced on May 18.
The medical device maker specializes in the med-surgery and cardiovascular segments, including endoscopy, urology and neuromodulation in the former segment, and cardiology and peripheral interventions in the latter.
Down about 40% so far in 2026, BSX seems seriously undervalued, with some analysts suggesting it should be in the $104 price range. The TipRanks ratings service reported 26 “buys” and one “hold” on the stock, with an average price target of $87, indicating 57% upside potential over the next year.
GE Healthcare Technologies Inc. (GEHC)
Chicago-based GE Healthcare engages in the development and manufacturing of medical technology, pharmaceutical diagnostics and digital solutions. GE Healthcare especially stands out as an inventive player in the AI services and AI-enabled devices medical field, with its medical supply products regularly used to lighten clinician loads, boost workflow processes and cut care-management costs.
Like most health tech stocks, GEHC is bogged down in a health care market that’s been battered by higher inflation, tariff woes and thinner margins in 2026, but there’s a lot to like about the stock. For example, it is joining other multinational corporations in taking the lead in the AI health care space.
“Companies like GE Healthcare are quickly applying AI to all their diagnostic imaging devices as well as anything pertaining to patient monitoring, laboratory and electronic medical records,” says Joe Sardano, CEO of Sensus Healthcare, a medical device company based in Boca Raton, Florida. “AI provides companies like GEHC tremendous opportunities to expand revenues into the areas of added services, providing customers with productivity, efficiencies and margins education.”
Despite the economic woes besetting health care stocks this year, analysts like what they see in GEHC. Twelve recent analyst reviews show an average price target of $82.36, with 34% upside potential over the next 12 months. Company insiders favor the stock, too, with GE Healthcare board member H. Lawrence Culp Jr. snapping up $5 million worth of GEHC stock in early May.
AI Health Care Portfolio Strategies for 2026
Investors in AI in health care will need to step up their due diligence in 2026, as the AI health care space moves along at a rapid clip. You can accelerate that process by knowing exactly what to look for in a good AI medtech stock.
“Investors are paying close attention to health care companies that can apply AI in practical ways that improve operations, support decision-making or strengthen long-term growth,” Minkara says. “Companies like Eli Lilly and Intuitive Surgical continue attracting interest because they operate in areas tied to innovation, demand growth and technology adoption across health care.”
Minkara also notes that AI-related health care investing still requires discipline, especially in sectors where enthusiasm can outpace execution. “Investors should pay attention to whether companies are showing measurable operational improvement, scalable infrastructure and long-term strategic direction rather than focusing only on short-term momentum,” he advises.
Other experts say it’s important to recognize what AI is mastering in the health care space, then focus on companies that are doing the best job of operating in the right channels.
“The AI health care market is still early, but it is scaling quickly across diagnostics, drug discovery, clinical documentation, revenue cycle, medical affairs, patient engagement and hospital operations,” Soliman says.
Investors should also not get caught up in talk about how AI is replacing physicians (it’s not). “Instead, focus on how AI is reducing friction in the system, with faster image interpretation, better clinical trial design, improved patient matching, automation of administrative work, more personalized treatment pathways and faster drug development,” Soliman says. “FDA-cleared AI medical devices are also accelerating, with the FDA’s public list showing AI tools across radiology, cardiology, neurology, pathology and other areas.”
Soliman believes the AI health care market is no longer theoretical, as research and results are starting to stack up. “The first AI health care wave is workflow automation and diagnostics; the next wave is drug development, precision medicine and AI-enabled clinical decision support,” he says.
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AI in Health Care: 8 Stocks to Buy in 2026 originally appeared on usnews.com
Update 05/19/26: This story was published at an earlier date and has been updated with new information.
