Digital health’s 2025 shape is pretty clear: money is flowing again, AI is getting absorbed into real workflows, and policy is quietly forcing the pipes to talk to each other. Rock Health’s Q3 2025 review shows $3.5 billion across 107 deals and $9.9 billion year-to-date, already ahead of 2024 by this point, which tells you investors still back digitally delivered, data-heavy care even after the post-2021 chill.
On the demand side, telehealth didn’t crash back to 2019, HHS tracking in May 2025 still shows elevated virtual use, especially in behavioral and chronic-care contexts, because insurers and states kept enough flex in their rules.
The real 2025 step-change is clinical AI creeping toward normal: the AMA’s 2024/early-2025 survey says roughly two-thirds of physicians are already using health AI, up from barely over a third a year earlier, and they mainly want admin offload and triage, not sci-fi diagnostics. That’s unusually fast physician adoption.
All of this is being hardened by regulation: ONC’s TEFCA build-out plus the HTI interoperability rules from ONC/CMS in 2024–25 mean data exchange is no longer optional plumbing; it’s becoming a market access requirement for digital tools. Net direction: fewer gimmicks, more reimbursable virtual care, AI inside the visit, and products that can actually plug into national exchange.
Methodology
For our list, we picked stocks from the digital healthcare industry that had the highest number of hedge funds holding stake in them as of Q2, 2025. We ranked the list as such. Our source for industry sampling was stockanalysis.com.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Tempus AI, Inc. (NASDAQ:TEM)
Number of Hedge Fund Holders: 27
Tempus AI, Inc. (NASDAQ:TEM) is one of the best digital health stocks to buy now.
Wall Street sentiment toward Tempus AI strengthened on November 5, 2025, following the company’s Q3 results, with three major firms reiterating positive ratings and updating their targets. Canaccord Genuity kept its Buy rating but trimmed its target slightly from $110 to $95.
In its commentary, Canaccord noted that “AI deployment at scale in clinical practice could drive strong long-term revenue growth for Tempus AI.”
Tempus’ blowout Q3 wasn’t magic; it was mix and scale. The Ambry-boosted genomics engine did the heavy lifting, with oncology test volumes up ~27% and hereditary testing surging, pushing total genomics revenue to ~$253M and overall sales to $334M. Data/Services grew too, with Insights licensing leading there, so fixed costs spread wider, lifting gross profit to ~$210M and tipping adjusted EBITDA positive. Yet GAAP stayed red thanks to stock comp, new Ambry amortization, and a $12M debt-extinguishment hit. Management raised the full-year bar because these growth levers look durable; the market’s wobble was about costs and future spend, not demand.
Tempus AI, Inc. (NASDAQ:TEM) is a health-tech company that applies artificial intelligence to clinical and molecular data, aiming to personalize treatment, especially in oncology, and extend its technology across a wider range of diseases.
9. GeneDx Holdings Corp. (NASDAQ:WGS)
Number of Hedge Fund Holders: 30
GeneDx Holdings Corp. (NASDAQ:WGS) is one of the best digital health stocks to buy now.
On October 29, 2025, Guggenheim lifted GeneDx (NASDAQ: WGS) to a $170 price target (Buy) after the company’s blow-out Q3 announcement a day earlier. GeneDx had just reported revenue of $116.7 million, up 52% year over year and roughly ~12% above Street; exome and genome revenue reached $98.9 million, up 65%, with exome/genome test volumes up 33%. Gross profitability widened too: adjusted gross margin improved to 74% (GAAP 72%), and adjusted net income rose to $14.7 million.
That print underpins Guggenheim’s call-outs, with exome and genome volumes still compounding, ASPs running higher, and gross margin trending up, hence the bigger target. Management also raised full-year 2025 guidance to $425–$428 million in revenue and 53–55% growth in exome/genome revenue, alongside a 70–71% adjusted gross-margin guide.
Crucially, Guggenheim addressed the 2026 spend comments: even with stepping up opex next year, the firm doesn’t read that as a return to negative EPS, framing it instead as investment against a now-proven scale curve in pediatric and rare-disease genomics.
GeneDx Holdings Corp. (NASDAQ:WGS) specializes in genomic testing, with a focus on whole-exome and whole-genome sequencing for pediatric and rare disorders. Its offerings also include data solutions that support clinical decision-making and precision medicine.
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