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3 Medical Instrument Stocks Exploring GenAI to Tackle Industry Woes
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Over the past several months, generative AI (GenAI) in the Medical Instruments industry has moved from experimental to operational use. Applications include generating synthetic medical images, simulating disease progression, creating potential drug molecules and simulatingtheir effects, to accelerate the long and costly drug development process. McKinsey’s latest survey of US healthcare leaders highlights several signals of gen AI’s maturation, with about 50% already implementing it across their organizations and more than 80% having deployed their first use cases to end users.
At the same time, regulatory bodies worldwide are adapting to this shift. The European Union AI Act (EU AI Act) 2024 introduced strict requirements for high-risk AI systems, such as AI-based medical software, including risk-mitigation systems, high-quality data sets and clear user information. As of 2025-end, the FDA’s AI/ML-Enabled Medical Devices list includes a cumulative total of more than 1400 devices, satisfying the applicable premarket requirements.
Grand View Research estimates the global AI in the healthcare market to expand at a CAGR of 38.9% from 2026 to 2033, building on a $36.67 billion valuation in 2025. Amid industry wide challenges, companies like Electromed (ELMD - Free Report) , Globus Medical (GMED - Free Report) and Intuitive Surgical (ISRG - Free Report) appear well-positioned to thrive.
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 Towards Healthcare, global GenAI in the healthcare market is projected to expand at a CAGR of 35.1% between 2026 and 2035, from a value of $2.65billion in 2025. Growth is being driven by rising demand for AI solutions in the healthcare industry, increasing investments and strategic partnerships between healthcare institutions and AI technology providers, as well as demand for precise and personalized treatment plans. 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 J.P. Morgan April 2026 report, medtech M&A activity in 2025 was highly concentrated, with large transactions accounting for the majority of value. At the same time, underlying deal volume remained more stable. Notable transactions in the fourth quarter include Abbott’s acquisition of Exact Sciences for $23 billion and Blackstone and TPG’s take-private deal of Hologic for $18 billion. The insight also states that medtech deal activity totaled $26.6 billion across 38 deals in the first quarter of 2026, including Boston Scientific’s $15 billion agreement to acquire Penumbra and Danaher’s agreement to acquire Masimo for $10 billion.
Business Trend Disruption: The IMF’s April 2026 World Economic Outlook notes that the outbreak of war in the Middle East in February 2026 has interrupted what had been a steady growth trajectory. Assuming a short-lived conflict,global growth is projected at 3.1% in 2026, a downward revision of 0.2 percentage points from its January forecast. Prior to the war, the agency had been preparing to raise its global growth outlook, reflecting continued economic momentum, a tech-investment boom, moderation in trade policy tensions, fiscal support in some countries and accommodating financial conditions. Global headline inflation is expected to rise from 4.1% in 2025 to 4.4% in 2026, before resuming its decline in 2027. Growth slowdown and an increase in inflation are expected to be more pronounced in emerging market and developing economies. The IMF apprehends that fostering adaptability, maintaining credible policy frameworks and reinforcing international cooperation are essential to navigating the current shock.
Zacks Industry Rank Indicates Dull 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 gloomy near-term prospects. The industry, housed within the broader Zacks Medical sector, currently carries a Zacks Industry Rank #139, which places it in the bottom 43% of 243 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 6.9% against the broader sector’s rise of 4.9%. The S&P 500 has returned 30.3% 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 24.00X compared with the broader industry’s 19.68X and the S&P 500’s 21.85X.
Over the past five years, the industry has traded as high as 41.40X, as low as 24.00X and at the median of 32.12X, 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
Electromed: Electromed develops airway clearance products applying High Frequency Chest Wall Oscillation technologies in pulmonary care for patients.Its products are sold in both the homecare market and the hospital market for inpatient use.Electromed delivered its 14th consecutive quarter of year-over-year revenue and profit growth in the first quarter of 2026. With 86% of covered U.S. lives now under contract and manufacturing optimization complete, the company is well-positioned to capture the significant bronchiectasis market opportunity.
The Zacks Consensus Estimate for this Zacks Rank #1 (Strong Buy) company’s 2026 earnings per share (EPS) indicates a 41.2% rise over 2025. The consensus mark for 2026 revenues implies a 15.6% improvement. ELMD has an earnings yield of 3.1% against the industry’s negative 1% yield.
Globus Medical: Globus Medical develops advanced products and procedures to treat a variety of musculoskeletal conditions. The company’s 2023 merger with NuVasive enhanced its global commercial reach and operational capabilities, while the acquisition of Nevro in 2025 positioned it to alter the standard of care in the neuromodulation space. In first-quarter 2026, Globus Medical’s worldwide net sales climbed 27% year over year on a reported basis, while the bottom-line surged 64.7%.
The Zacks Consensus Estimate for this Zacks Rank #1 company’s 2026 EPS calls for 17.1% growth. The consensus mark for 2026 revenues indicates an 8.8% improvement. GMED has an earnings yield of 5.8% against the industry’s negative 1% yield.
Price & Consensus: GMED
Image Source: Zacks Investment Research
Intuitive Surgical: Intuitive Surgical is a renowned name in minimally invasive care and robotic-assisted surgery. The company’s technologies include the da Vinci surgical systems and the Ion endoluminal system. In the first quarter of 2026, worldwide combined procedures grew nearly 17% year over year, with strong performance in the United States and Europe. Intuitive Surgical is also investing in the data and digital infrastructure that underpins its longer-term innovation road map.
The Zacks Consensus Estimate for this Zacks Rank #2 (Buy) company’s 2026 EPS implies year-over-year growth of 16.5%. The consensus mark for 2026 revenues indicates an improvement of 16.5%. ISRG has an earnings yield of 2.4% against the industry’s negative 1% yield.
Price & Consensus: ISRG
Image Source: Zacks Investment Research
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3 Medical Instrument Stocks Exploring GenAI to Tackle Industry Woes
Over the past several months, generative AI (GenAI) in the Medical Instruments industry has moved from experimental to operational use. Applications include generating synthetic medical images, simulating disease progression, creating potential drug molecules and simulatingtheir effects, to accelerate the long and costly drug development process. McKinsey’s latest survey of US healthcare leaders highlights several signals of gen AI’s maturation, with about 50% already implementing it across their organizations and more than 80% having deployed their first use cases to end users.
At the same time, regulatory bodies worldwide are adapting to this shift. The European Union AI Act (EU AI Act) 2024 introduced strict requirements for high-risk AI systems, such as AI-based medical software, including risk-mitigation systems, high-quality data sets and clear user information. As of 2025-end, the FDA’s AI/ML-Enabled Medical Devices list includes a cumulative total of more than 1400 devices, satisfying the applicable premarket requirements.
Grand View Research estimates the global AI in the healthcare market to expand at a CAGR of 38.9% from 2026 to 2033, building on a $36.67 billion valuation in 2025. Amid industry wide challenges, companies like Electromed (ELMD - Free Report) , Globus Medical (GMED - Free Report) and Intuitive Surgical (ISRG - Free Report) appear well-positioned to thrive.
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 Towards Healthcare, global GenAI in the healthcare market is projected to expand at a CAGR of 35.1% between 2026 and 2035, from a value of $2.65billion in 2025. Growth is being driven by rising demand for AI solutions in the healthcare industry, increasing investments and strategic partnerships between healthcare institutions and AI technology providers, as well as demand for precise and personalized treatment plans. 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 J.P. Morgan April 2026 report, medtech M&A activity in 2025 was highly concentrated, with large transactions accounting for the majority of value. At the same time, underlying deal volume remained more stable. Notable transactions in the fourth quarter include Abbott’s acquisition of Exact Sciences for $23 billion and Blackstone and TPG’s take-private deal of Hologic for $18 billion. The insight also states that medtech deal activity totaled $26.6 billion across 38 deals in the first quarter of 2026, including Boston Scientific’s $15 billion agreement to acquire Penumbra and Danaher’s agreement to acquire Masimo for $10 billion.
Business Trend Disruption: The IMF’s April 2026 World Economic Outlook notes that the outbreak of war in the Middle East in February 2026 has interrupted what had been a steady growth trajectory. Assuming a short-lived conflict,global growth is projected at 3.1% in 2026, a downward revision of 0.2 percentage points from its January forecast. Prior to the war, the agency had been preparing to raise its global growth outlook, reflecting continued economic momentum, a tech-investment boom, moderation in trade policy tensions, fiscal support in some countries and accommodating financial conditions. Global headline inflation is expected to rise from 4.1% in 2025 to 4.4% in 2026, before resuming its decline in 2027. Growth slowdown and an increase in inflation are expected to be more pronounced in emerging market and developing economies. The IMF apprehends that fostering adaptability, maintaining credible policy frameworks and reinforcing international cooperation are essential to navigating the current shock.
Zacks Industry Rank Indicates Dull 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 gloomy near-term prospects. The industry, housed within the broader Zacks Medical sector, currently carries a Zacks Industry Rank #139, which places it in the bottom 43% of 243 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 6.9% against the broader sector’s rise of 4.9%. The S&P 500 has returned 30.3% 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 24.00X compared with the broader industry’s 19.68X and the S&P 500’s 21.85X.
Over the past five years, the industry has traded as high as 41.40X, as low as 24.00X and at the median of 32.12X, 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
Electromed: Electromed develops airway clearance products applying High Frequency Chest Wall Oscillation technologies in pulmonary care for patients.Its products are sold in both the homecare market and the hospital market for inpatient use.Electromed delivered its 14th consecutive quarter of year-over-year revenue and profit growth in the first quarter of 2026. With 86% of covered U.S. lives now under contract and manufacturing optimization complete, the company is well-positioned to capture the significant bronchiectasis market opportunity.
The Zacks Consensus Estimate for this Zacks Rank #1 (Strong Buy) company’s 2026 earnings per share (EPS) indicates a 41.2% rise over 2025. The consensus mark for 2026 revenues implies a 15.6% improvement. ELMD has an earnings yield of 3.1% against the industry’s negative 1% yield.
You can see the complete list of today's Zacks #1 Rank stocks here.
Price & Consensus: ELMD
Image Source: Zacks Investment Research
Globus Medical: Globus Medical develops advanced products and procedures to treat a variety of musculoskeletal conditions. The company’s 2023 merger with NuVasive enhanced its global commercial reach and operational capabilities, while the acquisition of Nevro in 2025 positioned it to alter the standard of care in the neuromodulation space. In first-quarter 2026, Globus Medical’s worldwide net sales climbed 27% year over year on a reported basis, while the bottom-line surged 64.7%.
The Zacks Consensus Estimate for this Zacks Rank #1 company’s 2026 EPS calls for 17.1% growth. The consensus mark for 2026 revenues indicates an 8.8% improvement. GMED has an earnings yield of 5.8% against the industry’s negative 1% yield.
Price & Consensus: GMED
Image Source: Zacks Investment Research
Intuitive Surgical: Intuitive Surgical is a renowned name in minimally invasive care and robotic-assisted surgery. The company’s technologies include the da Vinci surgical systems and the Ion endoluminal system. In the first quarter of 2026, worldwide combined procedures grew nearly 17% year over year, with strong performance in the United States and Europe. Intuitive Surgical is also investing in the data and digital infrastructure that underpins its longer-term innovation road map.
The Zacks Consensus Estimate for this Zacks Rank #2 (Buy) company’s 2026 EPS implies year-over-year growth of 16.5%. The consensus mark for 2026 revenues indicates an improvement of 16.5%. ISRG has an earnings yield of 2.4% against the industry’s negative 1% yield.
Price & Consensus: ISRG
Image Source: Zacks Investment Research