The year 2025 is witnessing a significant expansion of the Medical Info Systems industry, fueled by new federal policies and strong regulatory support. A major catalyst is Donald Trump’s $500 billion Stargate AI project, aimed at accelerating AI infrastructure across sectors, including healthcare, with initial backing from SoftBank, OpenAI, Oracle and MGX. Per a Business Research Company report, the use of AI in the medical device market is expected to witness a CAGR of 29.9% during 2026-2029. This surge in digital healthcare demand presents key growth opportunities for companies like Veeva Systems VEEV, Hims & Hers Health HIMS and Butterfly Network BFLY.
Yet, this upbeat vision is being undercut by another cornerstone of Trump’s economic agenda, tariffs. The administration’s recent escalation of tariffs, ranging up to 145% on Chinese imports, 32% on Taiwanese goods and 46% on Vietnamese products, threatens to disrupt America’s “AI Ambitions.”
Industry Description
The Zacks Medical Info Systems industry comprises companies that develop and market healthcare information systems. These companies offer software and hardware solutions to healthcare providers with secure access to real-time clinical, administrative and financial data in a time-efficient manner. Focus on patient satisfaction, security of patient data and administrative cost control has increased the need for big data, cloud computing, blockchain and AI. Industry players like Omnicell and Allscripts are raking in millions from the sale of software and related hardware, professional services and IT outsourcing services, and recurring service contracts for software maintenance and transaction processing services.
3 Trends Shaping the Future of the Medical Information Industry
AI and Health: The medical sector is one of the major adopters of AI, which is currently being used to synthesize new compounds for drugs and create devices for more precise measurement and faster and more accurate diagnosis. Starting from generative AI to surgical robotics, one common application of these has been in diagnostic settings. Tools like electronic health records, electronic medical records, predictive analytics and real-time alerting have been gaining prominence. Trump 2.0’s new $500-billion Stargate project to fund infrastructure for artificial intelligence is set to boost this momentum by enhancing data management and interoperability. Going by a Pragma Market Research report, the global AI in healthcare market is expected to hit $95.65B by 2025. AI-powered tools are enhancing diagnostics, with innovations like Google’s DeepMind and AI-enabled wearables from Medtronic and Apple driving more accurate diagnostics and continuous patient monitoring.
Growing Demand for Remote Healthcare: Within the medical information systems space, remote patient monitoring segments continue to grow at a fast rate, courtesy of the rapid increase in usage of wearable devices and telehealth services. The major driver behind this growth is the increasing awareness about the usefulness of continuous patient monitoring devices. This has proved to be a game-changer in increasing the standard and efficiency of medical care. Further, health tech products are also accelerating the diagnosis process and automating hospital workflows through robotics, AI-driven chatbots and so on. Going by a Custom Market Insights report, the global smart healthcare products market was valued at $145.9 billion in 2023 and is expected to reach $485.71 billion by 2032, at a CAGR of 12.78%.
Tariff Threats on AI Ambition: The Trump administration’s sweeping tariffs, some reaching as high as 145% are overshadowing America’s AI ambitions, particularly in the healthcare sector. While the $500 billion Project Stargate is aimed at making the United States a global AI leader, rising costs on imported hardware like servers and power systems are making it more expensive to build and run the data centers needed for AI. Even though semiconductor chips are currently exempted, many other components critical to AI infrastructure are now subject to these tariffs. This has hit the medical device industry hard, where AI is being used for early disease detection, predictive care and personalized treatments. These tools rely on powerful computing and specialized equipment, which could now face delays or higher costs. Smaller hospitals and startups may struggle most, as the uncertain trade environment makes investment riskier.
Zacks Industry Rank
The Zacks Medical Info Systems industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #28, which places it in the top 11% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
We will present a few stocks with the potential to outperform the market based on a strong earnings outlook. However, it’s worth considering the industry’s shareholder returns and current valuation first.
Industry Underperforms S&P 500 and Outperforms Sector
The industry has underperformed the Zacks S&P 500 composite as well as the sector over the past year.
The industry has lost 6.6% in the past year compared with the Zacks Medical sector’s decline of 4.4%. The S&P 500 has risen 25.3% in the said time frame.
One Year Price Performance
Industry’s Current Valuation
On the basis of forward 12-month price-to-sales (P/S), which is commonly used for valuing medical stocks, the industry is currently trading at 3.95X compared with the S&P 500’s 4.56X and the sector’s 2.50X.
Over the last five years, the industry has traded as high as 15.78X, as low as 3.29X, and at the median of 5.50X, as the charts below show.
Price-to-Sales Forward Twelve Months (F12M)
Price-to-Sales Forward Twelve Months (F12M)
3 Medical Info Systems Stocks to Bet On
Veeva Systems offers cloud-based software applications and data solutions for the life sciences industry. The company’s Veeva Vault is the first cloud-based content management system built specifically for the life sciences segment. Vault CRM, the next-generation CRM for life sciences, is part of Veeva Commercial Cloud, a family of software, data, and services to advance commercial excellence in life sciences.
Veeva Systems currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for fiscal 2026 earnings indicates a 10.8% improvement from the year-ago level. For fiscal 2026, the company is expected to report earnings growth of 11%.
Price and Consensus: VEEV
Hims & Hers Health addresses a vast unmet healthcare market, leveraging a $360 million U.S. total addressable market across specialties like mental health, weight loss and dermatology. Its personalized product offerings drive subscriber growth, with over 2 million subscribers contributing to rising recurring revenues. Targeting $100 million from new categories by 2025, the company invests in GLP-1 weight-loss solutions, advanced tech and compounding pharmacies to scale.
Hims & Hers Health currently holds a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2025 earnings indicates a 58% jump from the 2024 level. For 2025, the company is expected to report revenue growth of 166.7%.
Price and Consensus: HIMS
Butterfly Network is a digital imaging company that is gaining popularity with its proprietary Ultrasound-on-Chip semiconductor technology and ultrasound software solutions. In 2018, Butterfly launched the world’s first handheld, single-probe, whole-body ultrasound system, Butterfly iQ. It was followed by iQ+ in 2020 and iQ3 in 2024. Butterfly Network combines advanced hardware, intelligent software, AI, services and education to drive the adoption of affordable, accessible imaging. BFLY currently carries a Zacks Rank #2.
You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for 2025 earnings indicates a 5.9% improvement from the 2024 level. For the same period, the company is expected to report sales growth of 18.9%.
Price and Consensus: BFLY
This article originally published on Zacks Investment Research (zacks.com).
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