Wall Street Breakfast Podcast: AI: 11% Of Healthcare Budgets In 2024

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AI to represent 11% of healthcare budgets in 2024 - Morgan Stanley. (00:33) Thoma Bravo in advanced talks to purchase NextGen Healthcare (NXGN)- report. (01:44) Nestle-partnered (OTCPK:NSRGY) weight loss capsule succeeds in pivotal trial. (02:15)

This is an abridged transcript of the podcast.

According to Morgan Stanley, the budgetary allocation to artificial intelligence and machine learning in the healthcare sector is expected to reach 10.5% in 2024, up from 5.5% in 2022,

Recursion Pharmaceuticals is an AI-led drug discovery company. In July Recursion (NASDAQ:RXRX) surged after receiving a $50M investment from chip maker Nvidia (NASDAQ:NVDA). Recursion's (RXRX) rivals including Abcellera Biologics (ABCL) and Absci Corporation (ABSI) among others also rallied in reaction.

Morgan Stanley argues that the potential use of AI and machine learning could be transformational for the healthcare sector and will not be limited to drug discovery.

Citing a recent survey, the bank noted that 94% of healthcare companies employ at least some form of AI/ML, and only 24% of medical devices currently leverage AI/ML technology.

According to Morgan Stanley, when it comes to AI and ML applications, healthcare investors should specifically focus on four key areas: Life sciences tools and diagnostics, Medical technology, Biopharma, and Healthcare services and technology.

Private equity firm Thoma Bravo is in advanced discussions to acquire NextGen Healthcare (NASDAQ:NXGN).

NextGen is a patient record software provider.

According to a Bloomberg report on Monday, which cited people familiar with the situation, Thoma Bravo may announce a deal as soon as this week.

The report comes after a Reuters report late last month that NextGen (NXGN) was exploring options, including a sale. NextGen has a market cap of $1.3 billion.

Shares of Epitomee Medical rose on Monday on the Tel Aviv Stock Exchange after the Israeli biomedical company said that its experimental weight loss capsule developed with Nestlé (OTCPK:OTCPK:NSRGY) (OTCPK:OTCPK:NSRGF) succeeded in a pivotal trial.

However, the company has yet to publish the full results of the study and did not indicate if the results were statistically significant. Epitomee intends to seek the FDA’s 510(k) clearance to sell the product in the U.S.

The 279-subject trial was designed with a predetermined objective to achieve more than 5% weight loss in 35% of participants.

Epitomee’s weight management capsule is a medical device designed to activate biological pathways that regulate how full you feel as well as food intake once it reaches the stomach.

Nestlé Health Science, has exclusive rights to commercialize the pill.

The results come at a time of rising interest in the weight loss space, with drugmakers such as Novo Nordisk (NVO) and Eli Lilly (LLY) adding billions of dollars to their market caps this year as a result.

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On our catalyst watch for the day,

• The three-day Voice & AI Conference in Washington, DC will include presentations by executives from Walmart (WMT), JPMorgan (JPM), OpenAI, and Nvidia (NVDA).

• The three-day Goldman Sachs Communacopia Technology Conference will give investors the latest reads on consumer spending trends. Some of the retail companies due to give presentations include eBay (EBAY), Etsy (ETSY), IMAX (IMAX).

U.S. stocks on Friday ended mixed, but wrapped up a busy week with solid gains.

The Nasdaq (COMP.IND) closed lower by 0.02%. The S&P 500 (SP500) rose 0.18%. The Dow (DJI) gained 0.33%.

Of the 11 S&P sectors, six ended in positive territory, led by Energy and Materials. Consumer Staples and Consumer Discretionary topped the losers.

For the week, the Nasdaq added 3.25%, the S&P advanced 2.50% and the Dow climbed 1.43%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are mixed. The Dow is up 0.05%, the S&P 500 is down 0.15% and the Nasdaq is down 0.4%. Crude oil is down 0.8% at more than $85 a barrel. Bitcoin is down 0.6%.

In the world markets, the FTSE 100 is up 0.07% and the DAX is down 0.25%.

The biggest stock movers for the day premarket: Airbnb (NASDAQ:ABNB) is up more than 5% and Blackstone (NYSE:BX) is up roughly 4% on news that the stocks would join the S&P 500 prior to the open of trading on Monday, Sept. 18.

On today’s economic calendar, at 10am factory orders.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.