3 Medical Services Stocks Capitalizing on the Healthcare AI Boom
The Medical Services sector is undergoing major changes driven by technology, value-based care, and a focus on patient-centered solutions and precision medicine. Remote treatment demand is pushing growth in digital healthcare, especially telemedicine and AI analytics. Providers use these tools to improve diagnostics, streamline operations, and enhance patient outcomes. Value-based care models support preventive and personalized approaches.
According to Precedence Research, the global healthcare analytics market was valued at $53.1 billion in 2024 and is expected to grow at a 21.4% CAGR from 2025 to 2034. This growth benefits payers, healthcare professionals, and patients through advanced insights and services. Companies like CVS Health, BrightSpring Health Services, and GeneDx Holdings stand to gain from these shifts. Meanwhile, the U.S. healthcare system faces post-pandemic pressures, labor shortages, and changing payer mixes, driving a surge in demand for skilled nursing professionals. A Mercer report from 2024 projects a shortfall of over 100,000 healthcare workers by 2028, including 73,000 nursing assistants. This shortage will increase labor costs, but technology-driven care is also creating new specialized roles.
Industry Description
The Zacks Medical Services industry includes third-party providers and caregivers that support core healthcare companies to achieve economies of scale. It covers pharmacy benefit managers, contract research organizations, wireless MedTech firms, testing labs, surgical facility providers, and workforce solution companies. The industry has been shifting from volume-based to value-based care. A resurgence in medical tourism is further boosting demand.
As care models evolve, there’s a growing need for specialized external service providers. Effective healthcare management has made this industry an essential part of modern healthcare systems.
3 Trends Shaping the Future of the Medical Services Industry
Digital Revolution
Digital platforms are becoming more prominent in medical devices across the U.S. A 2024 report by Statista forecasts a 9.2% CAGR in the digital health market from 2024 to 2028. The rise of unstructured health data, advanced analytics, and demand for personalized services highlight big data's growing role in healthcare. Roots Analysis estimates the global big data healthcare market will grow from $78 billion in 2024 to $540 billion by 2035, with a CAGR of 19.2%.
Organizations using AI technologies have seen treatment costs drop by 50% and patient outcomes improve by over 50%.
Healthcare Staffing Shortage to Continue
The COVID-19 pandemic led many frontline workers to leave healthcare. An aging population intensifies staffing shortages, with about 10,000 people aged 59-77 joining Medicare daily. McKinsey predicts 40 million new healthcare jobs globally by 2030 but highlights a significant workforce gap. WHO projects a shortfall of 9.9 million physicians, nurses, and midwives worldwide by 2030. This shortage has pushed healthcare wages higher.
According to HR for Health, labor costs and staffing challenges have caused hospital expenses to rise, with a 15.6% increase in labor costs per adjusted discharge since before the pandemic.
Revival in the Nursing Care Market
Nurses’ roles are evolving alongside medical technology and healthcare delivery changes. Telehealth and remote patient monitoring extend nursing care to rural and underserved areas. Specialized nursing roles—such as nurse practitioners, critical care specialists, and geriatric nurses—are in high demand due to increased patient complexity.
The Bureau of Labor Statistics projects a 40% growth in employment for nurse anesthetists, nurse midwives, and nurse practitioners between 2023 and 2033. Approximately 31,900 openings for these roles are expected annually over the decade.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Medical Services industry is part of the broader Zacks Medical sector and holds a Zacks Industry Rank of #67, placing it in the top 27% of 245 industries. This rank, based on earnings outlooks, suggests strong near-term potential. Historically, the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1.
Before looking at specific stocks, it’s helpful to review the industry’s shareholder returns and valuation.
Industry Underperforms Sector and S&P 500
Over the past year, the Medical Services industry has lagged behind its sector and the S&P 500. Industry stocks collectively fell 13.4%, compared to a 12% dip in the Medical sector and a 10.6% increase in the S&P 500.
Industry's Current Valuation
The industry trades at a forward 12-month price-to-earnings (P/E) ratio of 14.6X, below the S&P 500’s 21.9X and the Medical sector’s 19.3X. Over five years, the industry’s P/E has ranged from 13.4X to 20.12X, with a median of 14.6X.
3 Stocks to Buy Right Now
Here are three Medical Services stocks with positive earnings estimates and strong Zacks Ranks (either #1 Strong Buy or #2 Buy):
-
GeneDx
GeneDx specializes in genetic testing, focusing on pediatric and rare disease diagnostics through whole-exome and genome sequencing. The company is developing an AI platform for next-generation sequencing (NGS) analysis and clinical reporting. GeneDx has a Zacks Rank #1 and a 2025 expected earnings growth rate of 336%. Its 2025 revenue is projected to rise 22.5% from 2024. -
CVS Health
CVS Health offers integrated pharmacy care and is investing in technology to reduce costs and improve customer experience. Improved Medicare Advantage star ratings for 2025 are positive for the company. CVS holds a Zacks Rank #2 with expected earnings growth rates of 12.6% for 2025 and 14.3% for 2026, alongside a long-term growth rate of 11.4%. -
BrightSpring
BrightSpring operates a home and community-based healthcare services platform in the U.S. It has improved care quality across its services, with over 80% of home health branches rated 4 stars or higher. Hospitalization rates continue to decline. The company is expected to grow earnings by 82.1% in 2025, with revenues forecasted to increase 9.1% from 2024. BrightSpring carries a Zacks Rank #2.
For healthcare professionals interested in advancing their skills in AI and digital health technologies, exploring specialized training can be valuable. Check out Complete AI Training's latest AI courses tailored to healthcare applications.
Your membership also unlocks:
