We recently compiled a list of the 10 Best Medical AI Companies. In this article, we are going to take a look at where Butterfly Network, Inc. (NYSE:BFLY) stands against the other medical AI companies.
The Need for AI in Healthcare
Generally, when you hear the term “artificial intelligence,” your mind jumps straight to semiconductor and big tech companies that have been making huge profits as a result of the AI boom. However, tech is not the only industry poised to make a big return because of the rise of AI. In fact, the healthcare industry may actually be the one to benefit the most from the AI revolution. The US has been battling a massive shortage of medical professionals for years now, with the American Medical Association reporting in 2022 that by 2034, the US may see shortages of between 17,800 and 48,000 primary care physicians and between 21,000 and 77,100 non-primary-care physicians. These shortages are arising out of strained labor market conditions and lower numbers of graduating doctors and nurses. This inescapable reality has been plaguing the medical field for quite some time now, and AI may be the revolutionary technology that helps alleviate some of the consequences of such shortages.
The main areas in healthcare that are poised to benefit from the rise of AI are robotics, medical devices, and drug discovery.
AI is Expected to Transform Healthcare
On June 4, Hologic CEO Steve MacMillan joined CNBC’s “Squawk on the Street” to discuss how his company is incorporating AI into its products and how we can expect AI to influence the provision of healthcare in the future. Here are some of his comments:
“We’re doing a combination of internal development and partnering in certain cases with folks who may have specific ideas. You know, at the end of the day, when you think about the big picture, what we’re seeing is a crunched or overworked healthcare workforce, advancing technologies, and really at the core at the highest level, very must disparities of care. So people are getting very different reads, and the ability to bring all that together using AI, I see as the magic to really bringing the level of healthcare and treatment up across the board. So you take the lowest common denominator and bring it way up.”
On the specific problems that AI is solving in healthcare, MacMillan had the following to say:
“It’s really a bit of everything, if you think about it. In radiology… what the machine learning and what AI is able to do is help the radiologist get to the image faster and see it clearer than they could have on their own, and then get to quicker diagnosis. We’ve reduced false positives, we’ve also increased the ability to not have all these callbacks and everything else, and are detecting more cancers.”
According to MacMillan’s insights, it’s very clear that the healthcare sector in the US has been plagued by the issues arising out of an overworked and dwindling workforce for years, but with the rise of more efficient technologies in medicine, the sector is finally able to make up for the consequences of these issues. As a result, medical AI companies have become increasingly popular among investors today. This is why we have compiled a list of these companies below, including some of the best healthcare stocks to buy under $50 and some of the best medical device stocks to buy now.
Our Methodology
We sifted through online rankings and healthcare ETFs to find medical AI stocks for our list. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest number.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A doctor looking at a ultrasound system with a Compass software interface, demonstrating the sophistication of the device.
Butterfly Network, Inc. (NYSE:BFLY)
Number of Hedge Fund Holders: 23
Market Capitalization: $204.6 million
Butterfly Network, Inc. (NYSE:BFLY) is yet another healthcare equipment company on our list, based in Burlington, Massachusetts. It develops, manufactures, and commercializes ultrasound imaging solutions.
The company is attempting to disrupt the ultrasound industry with its point-of-care solution and ultrasound-on-a-chip technology. Butterfly Network, Inc. (NYSE:BFLY) has received FDA clearance and has also commercially launched its IQ3 device. In 2023, Butterfly Network, Inc.’s (NYSE:BFLY) revenue topped $66 million. Investors and professionals in the medical AI space support this company because of its accuracy and ease of use of its products relative to the traditional cart-based model for ultrasounds. Butterfly Network, Inc. (NYSE:BFLY) is also using AI in its ScanLab platform to speed up the awareness and distribution of its product. However, despite the immense potential seen in this stock, this is also a high-risk, high-reward play in medical AI.
Butterfly Network, Inc. (NYSE:BFLY) was spotted in the 13F holdings of 23 hedge funds in the second quarter, with a total stake value of $21.8 million.
Overall BFLY ranks 7th on our list of the best medical AI companies. While we acknowledge the growth potential of BFLY as an investment, our conviction lies in the belief that some AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BFLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
