Nvidia (NASDAQ: NVDA) could echo Julius Caesar’s famous words: “Veni, vidi, vici.” In its journey since its establishment in 1993, the chipmaker has indeed achieved remarkable conquests.
Initially thriving in the gaming sector, Nvidia has significantly expanded its revenue streams by capitalizing on the deployment of its GPUs in data centers. Now, as it sets its sights on the next frontier, Nvidia is eyeing a $4.7 trillion market opportunity.
Big moves in a big market
Last year, the United States allocated an estimated $4.7 trillion towards healthcare, constituting approximately 18% of the nation’s total economic output. Nvidia has recently embarked on several significant initiatives within this expansive market.
While Nvidia’s involvement in healthcare is not entirely novel, the company has notably intensified its focus in this sector. In 2018, Nvidia introduced its Clara AI platform tailored for medical imaging, marking its initial foray into healthcare technology.
However, in recent weeks, Nvidia has demonstrated a heightened commitment to healthcare innovation. On March 18, the company unveiled a suite of 25 “microservices” designed for healthcare organizations. This platform facilitates the integration of generative AI into existing applications, empowering customers to enhance their services.
Moreover, at the 2024 GTC AI Conference held in March, Nvidia disclosed significant collaborations with healthcare leaders such as Johnson & Johnson and GE Healthcare. Notably, it is collaborating with Johnson & Johnson to integrate AI into surgical operations. Additionally, GE Healthcare has leveraged Nvidia’s technology to develop a model for analyzing ultrasound images.
How AI (and Nvidia) could transform healthcare
It’s undeniable that AI stands poised to revolutionize healthcare across multiple fronts. Starting with disease diagnosis, AI’s capabilities in analyzing medical images, exemplified by GE Healthcare’s collaboration with Nvidia’s TensorRT software, offer rapid insights into test results, facilitate personalized medical risk assessments, and provide valuable decision support for healthcare providers.
Moreover, AI plays a pivotal role in biopharmaceutical innovation, aiding in predicting protein structures, analyzing genetic sequences, and expediting drug development processes. Nvidia’s $50 million investment in Recursion Pharmaceuticals underscores its commitment to advancing AI-driven drug discovery efforts.
In enhancing medical technology, AI holds the promise of optimizing device effectiveness. For instance, Johnson & Johnson aims to leverage Nvidia’s IGX edge computing platform and Holoscan edge AI platform to innovate new surgical devices.
Addressing a significant pain point in the healthcare sector, AI presents opportunities to streamline administrative tasks, including appointment scheduling, claims processing, and clinical documentation. Although this area hasn’t been a primary focus for Nvidia thus far, it presents a substantial opportunity for the company to expand its impact in healthcare innovation.
Should you buy Nvidia stock because of its healthcare efforts?
Nvidia’s strategic foray into the burgeoning healthcare market holds significant promise for the company’s future success. However, I believe that solely banking on these healthcare initiatives may not suffice to justify immediate investment in the stock.
Yet, when considering Nvidia’s broader spectrum of endeavors alongside its healthcare ventures, the overall growth prospects remain compelling. Despite this, my primary apprehension with Nvidia lies in the lofty expectations already embedded in its stock price. Any deviation from stellar performance could precipitate a sharp decline in share value.
Nonetheless, I view any potential pullback as an attractive buying opportunity for this dynamic and high-performing stock. This sentiment holds true irrespective of whether Nvidia emerges triumphant in the healthcare arena.
