Healthcare provides AI and drug-discovery exposure for investors

Healthcare companies are deploying artificial intelligence across diagnostics, imaging, virtual nursing, patient monitoring and drug discovery. State Street’s Health Care Select Sector SPDR ETF (XLV) tracks healthcare stocks in the S&P 500 and provides a low-cost way to hold large-cap U.S. healthcare companies; the fund’s net asset value rose 14.66% over the 12 months ending May 31, 2026.

Hospitals, medical-device manufacturers and health software firms use AI to automate administrative tasks, analyze medical images, operate virtual nursing assistants and continuously monitor patients’ vital signs. These applications use algorithms to flag abnormalities, triage cases and reduce time spent on routine work.

In drug development, machine learning models run large numbers of molecular combinations to identify promising candidate compounds faster than traditional lab screening, shortening early-stage discovery timelines.

A Gallup poll found 11% of U.S. adults reported using GLP-1 medications for weight loss, an increase of eight percentage points from a year earlier. That change has increased demand for companies involved in obesity and metabolic treatments.

Demand for medical care and prescription drugs is relatively insensitive to short-term economic swings, a factor that leads to steadier revenue patterns for many healthcare firms compared with sectors tied closely to consumer spending.

XLV provides exposure to the S&P 500 healthcare sector at a low reported cost and reflects recent performance across large-cap healthcare names. Many investors have sought AI exposure through large technology companies; some market participants are examining healthcare firms to gain exposure to AI applications and growth in new therapeutic markets. Analysts and portfolio managers are monitoring how AI deployment and drug-market shifts affect individual companies and sector-level results.