Hello, Reader.
The marriage of AI and healthcare is one I’ve been keeping my eye on for a while now.
And last week, Northwestern Medicine announced a new healthcare breakthrough…
It has developed a new in-house generative AI system that can draft near-complete, personalized reports from X-rays and CT scans and flag life-threatening issues, like collapsed lungs, in real-time.
The AI system was deployed across the 12-hospital Northwestern Medicine network, where nearly 24,000 radiology reports were analyzed over a five-month period in 2024. The study found that, for X-rays, the AI system boosted radiologists’ productivity by 15% on average – and up to 40% for some.
“This is, to my knowledge, the first use of AI that demonstrably improves productivity, especially in healthcare.” said senior author Dr. Mozziyar Etemadi, an assistant professor of anesthesiology at Northwestern University Feinberg School of Medicine and of biomedical engineering at Northwestern’s McCormick School of Engineering. “Even in other fields, I haven’t seen anything close to a 40% boost.”
Northwestern’s system is the first generative AI fully embedded in clinical radiology. It could be a breakthrough in addressing global radiologist shortages and diagnosis delays.
AI-powered breakthroughs like this are on the rise in the healthcare industry.
That is why, in today’s Smart Money, I’d like to share a company that I’ve identified as one of the most promising disruptors in the healthcare sector, all thanks to its innovative use of AI.
This company provides industry-leading cloud infrastructure solutions; but its small, fast-growing healthcare solutions business could deliver surprisingly strong long-term growth.
Let’s dive in…
The Founding of This Blue-Chip Stock
In the late 1970s, Larry Ellison, one of the three co-founders of this company, stumbled across a research paper that contained a detailed outline of a digital database. It was a way of using specialized software to organize data so that information could be retrieved efficiently, even when huge amounts of it is stored.
The company’s first customer – the CIA – called this product “Oracle” because it would provide them with all the answers.
Thus, Oracle Corp. (ORCL) was born.
Since then, Oracle has become an increasingly dominant database and cloud company.
It operates the industry standard for relational databases – a structured method of data storage that tracks where each piece of information is kept. It’s a system that’s used by everyone from financial institutions to GenAI companies.
Roughly 98% of all Fortune 100 companies now use Oracle as their primary database, and the high switching costs of the technology has kept customers loyal. Migrating databases requires rewriting existing code, and most IT departments would prefer to stay with existing providers than risk any data loss.
The Austin-based firm has also been pushing into other services. In 2016, the company bought NetSuite, an enterprise resource planning (ERP) firm focused on small and medium-sized businesses.
Then, in April 2024, Oracle joined the rush to the “Healthcare Belt” – a fast-growing hub of healthcare firms in Tennessee – by announcing it would be moving its headquarters to Nashville.
Explaining the move, Oracle founder Ellison stated bluntly, “It’s the center of the industry we’re most concerned about, which is the healthcare industry.”
Oracle’s interest in the healthcare industry is why it spent $28 billion in 2022 to purchase Cerner Corp., an electronic health record system.
Days after Oracle closed its acquisition with Cerner, Ellison outlined a compelling plan to build a new generation of modern, secure healthcare information systems…
Oracle’s AI Healthcare Ambitions
Ellison detailed four specific benefits he expects the merger with Cerner to deliver…
- Better information for public healthcare policymaking.
- Easier interfaces for doctors and nurses.
- Improved data-based communication channels for patients and doctors to talk and share data.
- Enhanced AI models for researchers and drug developers.
That last benefit is particularly fascinating because it stems directly from the unique power of AI.
As the company explains on its website…
The new Oracle systems will be open so that technology partners and medical researchers will be able to develop AI-based modules and integrate them into the electronic health record system. Those modules will allow organizations with a great deal of domain expertise to share that expertise across the country and throughout the world. For example, Oracle partner Ronin worked with MD Anderson Cancer Center, one of the world’s top centers devoted to cancer patient care and research, to develop an AI module that monitors patients as they work through their treatment plans to reduce hospitalization.
It’s hard to overstate the potential of these AI improvements in healthcare.
The federal government currently spends more on the Department of Health and Human Services than on any other department. In other words, we spend more on healthcare (including Medicare and Medicaid) than on Social Security or the Department of Defense.
The costs of medical care are only growing. By 2030, the Centers for Medicare & Medicaid Services believe that health spending will equal 32% of total U.S. GDP.
Here’s where Oracle’s AI ambitions come in. By using AI to help hospitals track patients… to help drug researchers develop new therapies… and to reduce costs in the system… Oracle aims to become a significant part of how Western healthcare will evolve for the 21st century.
Because Oracle’s cloud infrastructure and its healthcare operations both provide comprehensive services to entire industries, the company should benefit from the overall growth of both AI and healthcare.
The “Next Gen” Stocks
In effect, Oracle is neck deep into of the fastest growing aspects of the modern economy: AI and healthcare.
That makes Oracle an unequivocal “Buy.”
Even if we don’t know which large language model (LLM) will come out ahead – or which biotech company will use AI to discover the next cure for cancer – it’s clear that Oracle will benefit.
That is why I recommended the company to my Fry’s Investment Report subscribers back in September. The company may be a legendary “old-timer” of the technology sector, but thanks to savvy, forward-looking strategic planning, it has become a dynamic AI play.
And Oracle isn’t the only company I’ve identified that is positively disrupting the healthcare industry.
I’m now recommending three “Next-Gen” healthcare companies that I believe possess enormous potential to generate robust profit growth from their new AI initiatives.
“Next-Gen” stocks are companies that are now finally converging with AI to become one of the biggest disruptions in the 21st century… and companies that the “top 1%” are currently piling into, be it Warren Buffett, Jeff Bezos, or Bill Gates.
I put all the information that you need to know about these Next Gen Stocks in a free, special broadcast that you can access here.
Regards,
Eric Fry
P.S. Volatility has been the name of the game this year, thanks in large part to headlines about tariffs, trade wars, and political drama whipsawing investor sentiment almost daily.
But even during periods of uncertainty there are also windows of opportunity… if you know where to look.
My colleague and master trader Jeff Clark does. His “chaos pattern” strategy helps cut through all the noise and find real opportunities.
You can learn all about his strategy – and how to double your money at least six different times over the next 12 months – in Jeff’s brand-new, free special broadcast, released just this morning.
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