“Healthcare is the most underappreciated AI beneficiary,” said Ark Invest CEO Cathie Wood in a recent statement that’s reverberating across Wall Street. As artificial intelligence revolutionizes fields like finance and marketing, its deeper impact may emerge in medicine, where breakthroughs in diagnostics, drug discovery, and patient monitoring are already unfolding. In response, hedge funds have begun to position themselves aggressively in companies poised to lead this transformation, placing bold bets on a new generation of healthcare AI leaders.

This article highlights the top 10 healthcare AI stocks to buy according to hedge fund activity. Major biotech firms like Moderna, which is leveraging AI in mRNA-based drug discovery, and Eli Lilly are now working with OpenAI to accelerate new medicine pipelines. Platform companies such as Tempus AI—known for its AI-powered diagnostic and sequencing tools—are attracting institutional capital, while legacy tech firms like IBM and Alphabet are re-emerging with dedicated healthcare AI platforms. Infrastructure providers like Nvidia are seeing investor interest, as their GPUs become essential to running large-scale health models. Together, these companies reflect a growing conviction among hedge funds that AI in healthcare isn’t just hype, it’s a long-term investment thesis with transformative upside.

Our Methodology 

For this list, we noted down all stocks that fall under the umbrella of pure-play Healthcare AI stocks. These stocks were ranked based on the number of hedge fund investors that hold stakes in them, as of Q1 2025.

Note: All data was recorded on July 1, 2025.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Top 10 Healthcare AI Stocks to Buy According to Hedge Funds

10. Simulations Plus, Inc. (NASDAQ:SLP)

Number of Hedge Fund Holders: 13

Simulations Plus (NASDAQ: SLP) is one of the top 10 healthcare AI stocks to buy according to hedge funds. Simulations Plus, Inc. (NASDAQ:SLP), a leading provider of modeling and simulation software for pharmaceutical research, saw its price target lowered by Craig-Hallum to $36 from $45 following a cautious Q3 pre-release and a downward revision of its fiscal year 2025 guidance. Despite maintaining a Buy rating, the firm highlighted growing macroeconomic headwinds that are weighing on the company’s services segment. Clients have reportedly been slow to initiate new contracts, delay clinical trials, and hold off on major spending decisions—a trend that’s been broadly felt across the healthcare landscape.

However, Simulations Plus’ core software segment remains resilient. Known for its predictive modeling platforms used in drug discovery and development, the company plays a key role in advancing New Approach Methodologies (NAMs), which aim to modernize and reduce reliance on traditional clinical trials. These technologies, essential in streamlining the drug development process, are gaining broader acceptance across regulators and pharmaceutical companies, solidifying Simulations Plus’ role in a rapidly evolving healthcare ecosystem.

Craig-Hallum sees long-term potential in this structural shift. While near-term disruptions may cloud visibility, the firm notes that Simulations Plus continues to operate in a growing, innovation-driven market. For investors looking to align with the digital transformation of drug development, the company represents a compelling opportunity rooted in both regulatory trends and scientific advancement.

9. Tempus AI, Inc. (NASDAQ:TEM)

Number of Hedge Fund Holders: 21

Tempus AI, Inc. (NASDAQ:TEM) is one of the top 10 healthcare AI stocks to buy according to hedge funds. On June 30, 2025, Guggenheim analyst Subbu Nambi reaffirmed a “Buy” rating on Tempus AI, Inc. (NASDAQ:TEM), while raising the firm’s price target from $65.00 to $75.00. The revised target reflects growing confidence in Tempus’ expanding role in transforming clinical care through precision medicine and data-driven insights.

Guggenheim’s updated price target follows steady progress in Tempus’ commercial partnerships and a growing footprint in both academic medicine and biopharmaceutical development. The analyst highlighted the company’s ability to scale its platform across specialties, pointing to its integrated software, sequencing, and analytics solutions as core strengths in a rapidly evolving healthcare landscape. As demand for personalized and evidence-based care accelerates, Tempus AI, Inc. (NASDAQ:TEM) is well-positioned to play a central role in the shift toward smarter, more predictive medicine. Guggenheim’s outlook underscores the firm’s belief that Tempus’ growth trajectory is both sustainable and strategically aligned with the future of healthcare delivery.

Tempus AI operates at the intersection of technology and healthcare, using one of the largest structured clinical and molecular data libraries in the world to personalize treatment decisions. The company works with hospitals, research institutions, and pharmaceutical firms to integrate real-world evidence into patient care, particularly in oncology, cardiology, and infectious diseases. Tempus’ proprietary platform uses machine learning and high-performance computing to uncover patterns in clinical and genomic data, enabling more accurate diagnoses and more effective therapies.