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3 Medical Instrument Stocks Tapping GenAI to Navigate Industry Woes
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Over the past 12 months, the application of generative AI (GenAI) in the Medical Instruments industry has moved from experimental to operational use, enhancing diagnostics, patient monitoring and intervention workflows. GenAI could transform health care through synthetic medical imaging, disease progression modeling sand drug molecule design with simulated effect, according to a 2025 U.S. National Science Foundation report. At the same time, regulatory bodies are adapting. The European Union AI Act (EU AI Act) 2024 introduced strict requirements for high-risk AI systems, such as AI-based software for medical purposes, including risk-mitigation systems, high-quality data sets and clear user information. In a recent article published in JAMA Health Forum, experts have proposed an approach to overseeing the clinical use of GenAI, comparable to how human clinicians are prepared and evaluated.
According to Fortune Business Insights, the global AI in the healthcare market is valued at $39.34 billion in 2025, and is projected to see a CAGR of 44% through 2034. Even so, challenges such as high implementation expenses, data breach concerns, and broader macroeconomic pressures weigh on the MedTech sector.
Companies like Globus Medical (GMED - Free Report) , Tactile Systems Technology (TCMD - Free Report) and IRadimed Corp. (IRMD - Free Report) have adapted well to changing consumer preferences.
Industry Description
The Zacks Medical - Instruments industry is highly fragmented, with participants engaged in research and development (R&D) in therapeutic areas. This FDA-regulated sector encompasses a vast array of products, from transcatheter valves and orthopedic devices to advanced imaging equipment and robotics. Recent trends highlight the integration of AI in diagnostics, the expansion of telemedicine, the rise of robotic-assisted surgeries and developments in 3D printing, continuous glucose monitoring systems and gene editing. The rise of GenAI is also reshaping MedTech, from speeding up patient recruitment to optimizing trial designs and improving regulatory processes. The FDA’s Total Product Life Cycle approach supports faster development of safe and effective medical devices critical to public health.
3 Trends Shaping the Future of the Medical Instruments Industry
GenAI Revolution: Over the past couple of years, there has been a significant increase in the adoption of GenAI within the medical instrument space, with hyper-personalization being the primary feature of GenAI-driven treatment options. GenAI, while analyzing vast and complex genetic and molecular data, is expected to help healthcare reach new heights in terms of predictive treatment options and smart hospital systems. According to the latest analysis by Towards Healthcare, global GenAI in the healthcare market is valued at $2.65 billion in 2025 and projected to expand at a CAGR of 35.1% through 2035. Key factors fueling the market’s growth include the increasing adoption of AI in healthcare, the growing availability of large healthcare datasets, and the need for more efficient and accurate decision-making tools. The application of AI in the diagnostics space is growing enormously, with the market expected to witness a CAGR of 46.1% by 2034.
M&A Trend: The medical instrument space has been benefiting from the ongoing merger and acquisition (M&A) trend. It is a known fact that smaller and mid-sized industry players attempt to compete with the big shots through consolidation. The big players attempt to enter new markets through a niche product. According to a Bain & Company report, momentum in medtech M&A rebounded in 2025 and continued to be dominated by smaller, targeted transactions. Larger deals such as Waters’ acquisition of BD’s Biosciences and Diagnostics businesses, and Stryker’s acquisition of Inari Medical grabbed headlines. Notably, spin-offs and divestitures accounted for more than a third of strategic deal value in the first 11 months of 2025, up from the previous five-year average. The report projected dealmaking strength to continue in 2026, as already seen with Boston Scientific’s $14.5-billion agreement to acquire Penumbra and Danaher’s $9.9-billion definitive agreement to acquire Masimo Corp.
Business Trend Disruption: Per the IMF’s January 2026 World Economic Outlook, global growth is expected to be steady at 3.3% in 2026 and 3.2% in 2027, revised slightly up since the October 2025 report. A few countries, especially low-income developing countries, have seen sizable downside growth revisions, often as a result of increased conflicts and recent tariff shocks. The good news is that global headline inflation is expected to decline from an estimated 4.1% in 2025 to 3.8% in 2026 and to 3.4% in 2027. However, the IMF apprehends that the current policy-generated disruptions to the ongoing disinflation process could interrupt the pivot to easing monetary policy, with implications for fiscal sustainability and financial stability. There are chances of higher nominal wage growth, which, in some cases, reflects the catch-up of real wages, accompanied by weak productivity and could make it difficult for firms to moderate price increases, especially when profit margins are already squeezed.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Medical Instruments industry’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat near-term prospects. The industry, housed within the broader Zacks Medical sector, currently carries a Zacks Industry Rank #87, which places it in the top 36% of 244 Zacks industries. 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 that have the potential to outperform the market based on a strong earnings outlook. It is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms S&P 500 & Sector
The industry has underperformed the Zacks S&P 500 composite and the sector in the past year.
The industry has declined 9% compared with the broader sector’s fall of 6.4%. The S&P 500 has returned 15.8% in a year.
1-Year Price Performance
Image Source: Zacks Investment Research
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing medical stocks, the industry is currently trading at 25.23X compared with the broader industry’s 19.33X and the S&P 500’s 20.89X.
Over the past five years, the industry has traded as high as 31.10X, as low as 25.23X and at the median of 28.77X, as the charts show below.
Price-to-Earnings Forward 12 Months (F12M)
Image Source: Zacks Investment Research
Price-to-Earnings Forward 12 Months (F12M)
Image Source: Zacks Investment Research
3 Stocks to Buy Right Now
Globus Medical: The company offers a comprehensive portfolio of differentiated technologies used to treat a variety of musculoskeletal conditions.Globus Medical expanded its global reach with the NuVasive merger in 2023, while the 2025 Nevro Merger gave the potential to alter the standard of care in the neuromodulation space and beyond. As of Dec. 31, 2025, it had an existing direct or distributor sales presence in 64 countries outside the United States.
The Zacks Consensus Estimate for this Zacks Rank #1 (Strong Buy) company’s 2026 EPS indicates an 8.7% rise from that reported in 2025. The consensus mark for 2026 revenues implies a 11.8% improvement. Globus Medical has an earnings yield of 5.2% against the industry’s negative 1.6% yield.
Tactile Systems Technology: The company provides medical devices for the treatment of underserved chronic diseases. Tactile Systems’ therapeutic focus spans vascular disease, including lymphedema and venous insufficiency, alongside oncology and airway clearance therapy for respiratory conditions. The acquisition of LymphaTech Inc. in February 2026 is viewed as a milestone in Tactile Systems’ evolution from a product-based company to a comprehensive, integrated solutions provider for lymphatic dysfunction.
The Zacks Consensus Estimate for this Zacks Rank #2 (Buy) company’s 2026 EPS calls for 9.1% growth. The consensus mark for 2026 revenues indicates a 39% improvement. Tactile Systems has an earnings yield of 4.4% against the industry’s negative 1.6% yield.
Price & Consensus: TCMD
Image Source: Zacks Investment Research
IRadimed: The company manufactures and markets Magnetic Resonance Imaging (MRI)-compatible medical devices and related accessories, disposables and services. It is the only known provider of a non-magnetic intravenous infusion pump system designed for safe use during MRI procedures and operates dependably in magnetic fields up to 15,000 gauss. In the United States, the company has a direct sales strategy, while internationally, it serves roughly 80 countries via independent distributors.
The Zacks Consensus Estimate for this Zacks Rank #2 company’s 2026 EPS implies year-over-year growth of 10.8%. The consensus mark for 2026 revenues indicates an improvement of 8.8%. iRadimed has an earnings yield of 2.1% against the industry’s negative 1.6% yield.
Price & Consensus: IRMD
Image Source: Zacks Investment Research
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3 Medical Instrument Stocks Tapping GenAI to Navigate Industry Woes
Over the past 12 months, the application of generative AI (GenAI) in the Medical Instruments industry has moved from experimental to operational use, enhancing diagnostics, patient monitoring and intervention workflows. GenAI could transform health care through synthetic medical imaging, disease progression modeling sand drug molecule design with simulated effect, according to a 2025 U.S. National Science Foundation report. At the same time, regulatory bodies are adapting. The European Union AI Act (EU AI Act) 2024 introduced strict requirements for high-risk AI systems, such as AI-based software for medical purposes, including risk-mitigation systems, high-quality data sets and clear user information. In a recent article published in JAMA Health Forum, experts have proposed an approach to overseeing the clinical use of GenAI, comparable to how human clinicians are prepared and evaluated.
According to Fortune Business Insights, the global AI in the healthcare market is valued at $39.34 billion in 2025, and is projected to see a CAGR of 44% through 2034. Even so, challenges such as high implementation expenses, data breach concerns, and broader macroeconomic pressures weigh on the MedTech sector.
Companies like Globus Medical (GMED - Free Report) , Tactile Systems Technology (TCMD - Free Report) and IRadimed Corp. (IRMD - Free Report) have adapted well to changing consumer preferences.
Industry Description
The Zacks Medical - Instruments industry is highly fragmented, with participants engaged in research and development (R&D) in therapeutic areas. This FDA-regulated sector encompasses a vast array of products, from transcatheter valves and orthopedic devices to advanced imaging equipment and robotics. Recent trends highlight the integration of AI in diagnostics, the expansion of telemedicine, the rise of robotic-assisted surgeries and developments in 3D printing, continuous glucose monitoring systems and gene editing. The rise of GenAI is also reshaping MedTech, from speeding up patient recruitment to optimizing trial designs and improving regulatory processes. The FDA’s Total Product Life Cycle approach supports faster development of safe and effective medical devices critical to public health.
3 Trends Shaping the Future of the Medical Instruments Industry
GenAI Revolution: Over the past couple of years, there has been a significant increase in the adoption of GenAI within the medical instrument space, with hyper-personalization being the primary feature of GenAI-driven treatment options. GenAI, while analyzing vast and complex genetic and molecular data, is expected to help healthcare reach new heights in terms of predictive treatment options and smart hospital systems. According to the latest analysis by Towards Healthcare, global GenAI in the healthcare market is valued at $2.65 billion in 2025 and projected to expand at a CAGR of 35.1% through 2035. Key factors fueling the market’s growth include the increasing adoption of AI in healthcare, the growing availability of large healthcare datasets, and the need for more efficient and accurate decision-making tools. The application of AI in the diagnostics space is growing enormously, with the market expected to witness a CAGR of 46.1% by 2034.
M&A Trend: The medical instrument space has been benefiting from the ongoing merger and acquisition (M&A) trend. It is a known fact that smaller and mid-sized industry players attempt to compete with the big shots through consolidation. The big players attempt to enter new markets through a niche product. According to a Bain & Company report, momentum in medtech M&A rebounded in 2025 and continued to be dominated by smaller, targeted transactions. Larger deals such as Waters’ acquisition of BD’s Biosciences and Diagnostics businesses, and Stryker’s acquisition of Inari Medical grabbed headlines. Notably, spin-offs and divestitures accounted for more than a third of strategic deal value in the first 11 months of 2025, up from the previous five-year average. The report projected dealmaking strength to continue in 2026, as already seen with Boston Scientific’s $14.5-billion agreement to acquire Penumbra and Danaher’s $9.9-billion definitive agreement to acquire Masimo Corp.
Business Trend Disruption: Per the IMF’s January 2026 World Economic Outlook, global growth is expected to be steady at 3.3% in 2026 and 3.2% in 2027, revised slightly up since the October 2025 report. A few countries, especially low-income developing countries, have seen sizable downside growth revisions, often as a result of increased conflicts and recent tariff shocks. The good news is that global headline inflation is expected to decline from an estimated 4.1% in 2025 to 3.8% in 2026 and to 3.4% in 2027. However, the IMF apprehends that the current policy-generated disruptions to the ongoing disinflation process could interrupt the pivot to easing monetary policy, with implications for fiscal sustainability and financial stability. There are chances of higher nominal wage growth, which, in some cases, reflects the catch-up of real wages, accompanied by weak productivity and could make it difficult for firms to moderate price increases, especially when profit margins are already squeezed.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Medical Instruments industry’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat near-term prospects. The industry, housed within the broader Zacks Medical sector, currently carries a Zacks Industry Rank #87, which places it in the top 36% of 244 Zacks industries. 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 that have the potential to outperform the market based on a strong earnings outlook. It is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms S&P 500 & Sector
The industry has underperformed the Zacks S&P 500 composite and the sector in the past year.
The industry has declined 9% compared with the broader sector’s fall of 6.4%. The S&P 500 has returned 15.8% in a year.
1-Year Price Performance
Image Source: Zacks Investment Research
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing medical stocks, the industry is currently trading at 25.23X compared with the broader industry’s 19.33X and the S&P 500’s 20.89X.
Over the past five years, the industry has traded as high as 31.10X, as low as 25.23X and at the median of 28.77X, as the charts show below.
Price-to-Earnings Forward 12 Months (F12M)
Image Source: Zacks Investment Research
Price-to-Earnings Forward 12 Months (F12M)
Image Source: Zacks Investment Research
3 Stocks to Buy Right Now
Globus Medical: The company offers a comprehensive portfolio of differentiated technologies used to treat a variety of musculoskeletal conditions.Globus Medical expanded its global reach with the NuVasive merger in 2023, while the 2025 Nevro Merger gave the potential to alter the standard of care in the neuromodulation space and beyond. As of Dec. 31, 2025, it had an existing direct or distributor sales presence in 64 countries outside the United States.
The Zacks Consensus Estimate for this Zacks Rank #1 (Strong Buy) company’s 2026 EPS indicates an 8.7% rise from that reported in 2025. The consensus mark for 2026 revenues implies a 11.8% improvement. Globus Medical has an earnings yield of 5.2% against the industry’s negative 1.6% yield.
You can see the complete list of today's Zacks #1 Rank stocks here.
Price & Consensus: GMED
Image Source: Zacks Investment Research
Tactile Systems Technology: The company provides medical devices for the treatment of underserved chronic diseases. Tactile Systems’ therapeutic focus spans vascular disease, including lymphedema and venous insufficiency, alongside oncology and airway clearance therapy for respiratory conditions. The acquisition of LymphaTech Inc. in February 2026 is viewed as a milestone in Tactile Systems’ evolution from a product-based company to a comprehensive, integrated solutions provider for lymphatic dysfunction.
The Zacks Consensus Estimate for this Zacks Rank #2 (Buy) company’s 2026 EPS calls for 9.1% growth. The consensus mark for 2026 revenues indicates a 39% improvement. Tactile Systems has an earnings yield of 4.4% against the industry’s negative 1.6% yield.
Price & Consensus: TCMD
Image Source: Zacks Investment Research
IRadimed: The company manufactures and markets Magnetic Resonance Imaging (MRI)-compatible medical devices and related accessories, disposables and services. It is the only known provider of a non-magnetic intravenous infusion pump system designed for safe use during MRI procedures and operates dependably in magnetic fields up to 15,000 gauss. In the United States, the company has a direct sales strategy, while internationally, it serves roughly 80 countries via independent distributors.
The Zacks Consensus Estimate for this Zacks Rank #2 company’s 2026 EPS implies year-over-year growth of 10.8%. The consensus mark for 2026 revenues indicates an improvement of 8.8%. iRadimed has an earnings yield of 2.1% against the industry’s negative 1.6% yield.
Price & Consensus: IRMD
Image Source: Zacks Investment Research