GPU makers want to make an even bigger impact in a market that accounts for 18% of the US GDP.
Nvidia (NVDA 2.45%) You could echo Julius Caesar’s words, “Veni, vidi, vici.” This phrase is translated as “I came, I saw, I conquered.” This chipmaker has overcome a lot since his 1993 founding.
For many years, Nvidia made most of its revenue from the gaming market. Lately, however, the company’s growth has been driven primarily by the introduction of GPUs into data centers. What’s the next frontier for Nvidia? Here’s the $4.7 trillion market the company is currently focused on:
Big moves in big markets
The United States spent an estimated $4.7 trillion on health care last year. This corresponds to about 18% of the country’s total economic output. Nvidia has been making some big moves in this big market lately.
To be sure, healthcare isn’t an entirely new focus for Nvidia. The company’s technology has previously been used in the medical field. For example, Nvidia launched his Clara AI platform for medical imaging in 2018. However, the company appears to have shifted its healthcare efforts into a higher gear.
Nvidia has announced multiple new healthcare collaborations and services over the past few weeks. On March 18, the company introduced a new suite of 25 “microservices” for healthcare organizations. The platform allows customers to integrate generative AI into existing applications.
At the 2024 GTC AI conference in March, Nvidia announced two major milestones with healthcare giants johnson & johnson and GE Healthcare. The company is collaborating with Johnson & Johnson to use AI in surgical procedures. GE Healthcare has developed a model for analyzing ultrasound images using Nvidia technology.
How AI (and Nvidia) can transform healthcare
It is no exaggeration to say that AI has the potential to transform healthcare. how? Let’s start by diagnosing the disease. AI is already showing great potential in the analysis of medical images, as GE Healthcare is doing with Nvidia’s TensorRT software. This technology helps quickly analyze test results, create personalized medical risk assessments for patients, and provide decision support to physicians.
Some biopharmaceutical companies are using AI in their drug development process. In particular, AI can predict protein structures and analyze gene sequences. Nvidia isn’t just helping biotech companies on this front.We also invested $50 million recursion medicineUtilizing AI in drug discovery.
AI can make medical technology devices more effective. That’s what J&J hopes to do by using Nvidia’s IGX edge computing platform and Holoscan edge AI platform to help develop new surgical devices.
One of the biggest frustrations of medical professionals in the United States is the amount of administrative work they have to do. AI has the potential to streamline a wide range of administrative tasks, including appointment scheduling, billing, and clinical documentation. Although this is not a major focus for Nvidia for now, it could be a huge opportunity for the company.
Should you buy Nvidia stock because of its commitment to healthcare?
Nvidia has the potential for great success as it continues to expand into the lucrative healthcare market. But I don’t think these healthcare initiatives alone justify buying the stock right now.
But what happens when you combine Nvidia’s healthcare efforts with all the other efforts the company is doing? The overall growth prospects remain very attractive. My biggest concern with Nvidia is that the company’s stock has very high expectations instilled in it, and any hint of less-than-stellar results could cause the stock to drop significantly.
Still, I think any pullback is a great buying opportunity for this high-flying stock. And that’s my view, whether her Nvidia conquers the healthcare market or not.
Keith Speights has no position in any stocks mentioned. The Motley Fool has a position in and recommends Nvidia. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
