As artificial intelligence (AI) has evolved from the enablers phase to the adopters phase. And investors are right to ponder which industries make for credible, long-term buyers of AI services and technologies. Healthcare stands out as one of the prime candidates.
Firstly, it already is a big AI adopter, and alone that could bolster the long-term thesis for AI exchange traded funds such as the WisdomTree Artificial Intelligence and Innovation Fund (WTAI). There is something that could be constructive for the longer-ranging outlooks for WTAI and its peers. It’s widely believed that the intersection of AI and healthcare is in its infancy.
Likewise, the usage cases for AI in healthcare are expansive. It potentially signals attractive opportunities for some WTAI member firms. Those include making some major surgeries less invasive, reducing research and development costs, and paring administrative redundancies – all of which are appealing to clinicians and investors.
Startup Could Hold AI/Healthcare Clues
To be sure, WTAI, which follows the WisdomTree Artificial Intelligence & Innovation Index, leans into established companies, many of which are large- or mega-cap firms with quality traits. The fund isn’t littered with speculative fare.
However, there are speculative elements to new technologies and their adjacency to established industries. With that in mind, the venture capital world could provide important clues regarding investors’ enthusiasm for the AI/healthcare combination.
A report by Silicon Valley Bank found that “$7.2 billion of U.S. VC dollars were invested in AI healthcare companies last year, representing 21% of total VC healthcare investment. So far, in 2024, $2.8 billion has already been invested in AI healthcare companies, with SVB projecting the sector to see $11.1 billion in VC capital deployed this year, the highest it has been since 2021,” reported Heather Landi for Fierce Healthcare.
Primarily, those investments are directed to private companies, meaning there aren’t direct effects for WTAI member firms. However, there are implications and positive ones at that. The above data confirm professional investors see merit and opportunity in the AI/healthcare relationship.
Interestingly, many of the investments referenced above weren’t targeted at new drug development. Thus reducing some of the risk in the AI/healthcare investing scenario. In what could be positive for some WTAI holdings that have more traditional tech traits, venture capitalists are directing cash to AI that can improve healthcare on the administrative front.
“Since 2021, startups in the administrative AI space — this includes companies focusing on using AI for virtual assistants, clinical note-taking, and revenue cycle operations — account for 60% of total AI investment in healthcare,” according to Fierce Healthcare.
Moreover, administrative costs are one of the biggest reasons why healthcare costs in the U.S. are elevated. There are compelling reasons to consider broader deployment of AI on this front.
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