The Blubber

Nvidia's, $NVDA, management has described the digital transformation of the healthcare industry as one of the largest and most data-intensive opportunities in tech


Last week, Nvidia revealed partnerships with Johnson & Johnson for the application of generative AI in surgery and with GE Healthcare to enhance medical imaging. These healthcare advancements, showcased at the 2024 GTC AI conference, along with the introduction of approximately two dozen new AI-driven tools for healthcare, underscore the significance of medicine for Nvidia's future revenue opportunities outside of the tech sector.

"The reason Nvidia is so prominent today is because it essentially provided the plumbing and technology for something that was previously not feasible, or would have required significantly more time, money, and resources," said Raj Joshi, a technology analyst and senior vice president at Moody's Ratings. "Healthcare, whether in biotechnology, chemicals, or drug discovery, is a very potent area."

Nvidia's shares have nearly doubled year-to-date, reflecting investor optimism in the untapped potential of the biotech industry. AI has the potential to accelerate drug discovery processes and repurpose drugs that may have initially failed to treat their intended diseases.

"Over the past 18 months or so, we tend to believe it is more hope than hype because of the tangible outcomes and the compelling use cases of how AI has assisted the pharmaceutical, medical technology, or biotechnology industries," said Arda Ural, EY Americas health and life sciences industry market leader.

Ural noted that drug development, a risky and expensive process that can take at least a decade from concept to clinical studies, is seeing substantial benefits from AI.

Approximately 41 percent of biotech CEOs surveyed by EY in late 2023 expressed interest in concrete applications of generative AI for their companies. "This is very high from my experience, having been in this industry for 30 years," Ural said. "This is a truly unique feature we are witnessing with AI being adopted much faster than other technologies."

Nvidia's healthcare focus at the conference was a reaffirmation of its long-standing ambition. During an earnings call with investors in February, Nvidia highlighted various ways its technology was being tailored for the medical field. Companies like Recursion Pharmaceuticals and Generate: Biomedicines are expanding their biomedical research using hyperscale or GPU specialized cloud providers, relying on Nvidia AI infrastructure to streamline the process.

"In healthcare, digital biology and generative AI are revolutionizing drug discovery, surgery, medical imaging, and wearable devices," said Colette Kress, Nvidia chief financial officer. "We have developed extensive domain expertise in healthcare over the past decade, creating the NVIDIA Clara healthcare platform and NVIDIA BioNeMo, a generative AI service for developing, customizing, and deploying AI foundation models for computer-aided drug discovery."

In 2021, NVIDIA invested $50 million in Recursion for its drug discovery projects, leveraging Recursion's biological and chemical data to train Nvidia's AI models on its cloud platform. Nvidia has also collaborated with Roche's Genentech and Schrödinger for drug discovery efforts.