2 AI Healthcare Stocks to Buy Right Now

While the advent of artificial intelligence (AI) has obviously changed the world, not every utilization of AI has necessarily made the world a better place. Indeed, a recent survey from PwC indicates that 56% of CEOs aren't yet seeing any significant benefit to their AI investments.

If there's one area where artificial intelligence could make a meaningful difference for the better, though, it's arguably the healthcare arena, where everything seems to be complicated. Here's a closer look at two healthcare stocks uniquely using the power of AI to grow their businesses, and reward shareholders as a result.

Image source: Getty Images.

Recursion Pharmaceuticals

Do you know how much it costs to bring a single drug to the market? The U.S. Department of Health and Human Services puts the average figure at nearly $900 million, although some equally credible estimates suggest the number can reach $2 billion, if not more. Worse, an estimate from the National Institutes of Health says that 9 out of 10 drugs that begin clinical trials ultimately don't win approval. Never mind the years required to do all of these preclinical and clinical trials.

But what if there was a way to virtually do much of this research and development (R&D) work in a matter of hours, at a fraction of the usual cost? That's what Recursion Pharmaceuticals (NASDAQ: RXRX) is offering customers.

It's not a substitute for clinical trials, to be clear. However, leaning on more than 50 petabytes (52.4 million gigabytes) of chemical and biological data, Recursion's AI-powered platform provides drug developers with a very good idea of how a drug might perform in the real world. This allows pharmaceutical companies to focus on their most promising prospects, and not waste resources on work that's unlikely to pay off.

And this isn't just theory. In addition to using its technology to pretest its own drugs, Recursion is partnering with more conventional pharma names like Sanofi and Roche Holding to develop the prospects of these third-party players.

It's still pretty early on for its business. Most of its operating revenue so far is coming from its partner drugmakers paying to virtually test their R&D ideas. Last year was a pivotal one for the company, though, with developmental milestone payments starting to flow in earnest. Another big swell of revenue is expected next fiscal year after modest top-line growth this year. Recursion Pharmaceuticals is very much entering the AI-powered drug development market that Global Market Insights expects to grow at an average of 30% per year through 2035.

Tempus AI

The other AI healthcare stock to consider buying sooner than later is more of a technology name than a healthcare one, but it's a great opportunity all the same. That's Tempus AI (NASDAQ: TEM).

Simply put, Tempus empowers caregivers. Its user interface looks and acts like an ordinary web portal, but it actually helps healthcare providers "make near real-time, data-driven decisions to deliver personalized patient care," including the "discovery, development, and delivery of optimal therapeutics." And no, there's nothing else out there quite like it.

It's not the premise that makes this stock such a compelling prospect, however. It's that it's already up, running, and off to the races. Tempus' paying customers clearly like what they're getting: The company's fourth-quarter revenue of $367 million was up 83% year over year, pushing it ever closer to a breakeven that's expected to materialize no later than the year after next.

This might convince you to take a swing on Tempus: Analysts' current consensus target of $77.93 is 70% above the stock's present price.

James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Roche Holding AG. The Motley Fool has a disclosure policy.