Healthcare could be the next big AI winner, Becci McKinley-Rowe says
XLV•Healthcare companies may benefit from AI through lower drug-development costs and faster development, though adoption could be gradual. BlackRock data shows $25 billion flowed into healthcare exchange-traded products after more than $17 billion in outflows from January 2023 through August 2025.
1. Healthcare's AI opportunity
AI’s first wave of market gains went to semiconductor manufacturers and other infrastructure providers, while the next wave may benefit companies adopting the technology. BlackRock’s analysis of more than 1,000 public-company earnings reports found that a greater percentage of companies across every US market sector are reporting tangible financial gains from AI, though only 30% of tech companies say it has boosted their bottom line.
2. Potential drug-development gains
Healthcare may be well positioned because of its data, the potential to reduce research and development costs, and the value of faster drug development. Around 90% of drugs in development are never approved, and some healthcare companies have more than a century of proprietary data. Developing a new medicine currently takes around 10 years and costs $2 billion; AI could shorten timelines and reduce friction in research, clinical testing and documentation.
3. Flows and uneven returns
Monthly investment flows into healthcare exchange-traded products turned consistently positive toward the end of 2025 after two years of outflows. More than $17 billion left these products between January 2023 and August 2025, followed by $25 billion invested since then. Healthcare has typically outperformed on days when AI-related stocks underperformed, but adoption may be gradual in the highly regulated industry, and performance among healthcare stocks has varied widely.
