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3 Medical Instruments Stocks Banking on GenAI to Tackle Industry Woes
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Generative AI (GenAI) is gaining practical applications across the Medical Instruments industry, moving beyond its experimental phase. Companies are using it to generate synthetic medical images, simulate disease progression, create potential drug molecules and predicttheir effects, helping accelerate the drug development process.In McKinsey’s fourth-quarter 2025 survey, 50% of U.S. healthcare leaders reported GenAI implementation, while more than 80% had deployed initial use cases. Although administrative efficiency has the greatest perceived potential, clinical productivity became the most widely adopted GenAI application among care organizations.
Meanwhile, the FDA recently released a discussion paper, Considerations for the Regulation of Generative AI-Enabled Medical Devices, highlighting the technology’s potential benefits and risks. GenAI-enabled devices could transform patient care but may also introduce risks that differ from traditional software and AI-enabled devices. The paper seeks stakeholder input on these challenges and regulatory approaches.The European Union AI Act (EU AI Act) 2024 also introduced strict requirements for high-risk AI systems, including AI-based medical software.
Fortune Business Insights projects the global AI in the healthcare market to expand at a CAGR of 43.9% through 2026-2034. Despite industry pressures, Veracyte (VCYT - Free Report) , Globus Medical (GMED - Free Report) and UFP Technologies (UFPT - Free Report) are well-positioned to benefit from continued AI adoption.
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 Zion Market Research, global GenAI in the healthcare market is projected to expand at a CAGR of 31.4% between 2026 and 2034. Growth is supported by the increasing use of AI-powered medical imaging, accelerated drug discovery, automated clinical documentation and growing physician burnout, which is boosting demand for intelligent workflow tools across hospitals, pharmaceutical companies and payers globally.The application of AI in the diagnostics space is growing enormously, with the market expected to witness a CAGR of 28.6% through 2026-2034.
M&A Trend: The medical instrument space has been benefiting from the ongoing merger and acquisition (M&A) trend. Smaller and midsized companies are turning to consolidation to gain scale and strengthen their competitive position, while larger players are pursuing acquisitions to enter niche markets and add specialized products and technologies to their portfolios. According to PWC’s Medtech: US Deals 2026 midyear outlook, Medtech M&A entered the second half of 2026 with continued momentum, supported by investment in innovation-led areas such as cardiovascular and neurostimulation, expansion into connected care and workflow platforms and continued carve-outs, take-privates, and other portfolio reshaping activity.Deal value reached $36.5 billion in the first half, following a decade-high level of M&A activity in 2025. Notable transactions included Boston Scientific’s $15 billion agreement to acquire Penumbra and Danaher’s $10 billion acquisition of Masimo. Medtronic also recently completed its $650 million acquisition of SPR Therapeutics, Inc., consisting of an upfront cash payment.
Business Trend Disruption: The IMF’s July 2026 World Economic Outlook projects global growth of 3% in 2026 and 3.4% in 2027, below the 3.5% average observed in 2024-25 but broadly unchanged from its April forecast on a cumulative basis. The slowdown reflects the drag from the Middle East conflict, partly offset by stronger demand from the global technology cycle as AI advances and adoption The effects vary across countries, depending largely on their exposure to the conflict and their role in the technology supply chain. Global headline inflation is expected to rise from 4.1% in 2025 to 4.7% in 2026 before easing to 3.9% in 2027. The projections were revised slightly higher from April, suggesting that the disinflation trend that began in early 2024 has stalled. The possibility of renewed Middle East conflict looms large and could extend commodity price volatility, disrupt supply chains, raise prices and weigh on financial conditions.
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 #99, which places it in the top 40% of 248 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 lagged the Zacks S&P 500 composite and the sector over the past year. The industry has declined 2.5% against the broader sector’s rise of 11.8%. The S&P 500 has returned 19% 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 25.97X compared with the broader industry’s 21.30X and the S&P 500’s 20.09X.
Over the past five years, the industry has traded as high as 41.07X, as low as 24.72X and at the median of 31.39X, 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
Veracyte: Based in California, Veracyte is a cancer diagnostics company, offering tests for prostate, thyroid, bladder and breast cancer. In the United States, it provides laboratory-developed tests through CLIA-certified labs in South San Francisco and San Diego, while the Prosigna breast cancer test is available internationally through laboratories and hospitals as an in vitro diagnostic. Its Afirma test leads the thyroid nodule molecular diagnostics market, driven by greater use among existing physicians, an expanding ordering-physician base and market share gains.
Veracyte sports a Zacks Rank #1 (Strong Buy) at present. The Zacks Consensus Estimate for the company’s 2026 EPS and revenues calls for 8.4% and 14.4% growth, respectively.
Globus Medical: Based in Pennsylvania, Globus Medical is a renowned musculoskeletal technology company, advancing care throughout spine, orthopedic trauma, joint reconstruction, biomaterials and enabling technologies. In 2023, the company expanded its spine business through the NuVasive merger and broadened into neuromodulation and pain treatment with the Nevro acquisition in 2025. Globus Medical’s International sales represented 21% of total net sales in the first half of 2026, spanning 61 countries outside the United States.
At present, GMED carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate calls for 25.4% EPS growth and 8.8% revenue growth for the company in 2026.
Price & Consensus: GMED
Image Source: Zacks Investment Research
UFP Technologies: Massachusetts-based UFP is a contract development and manufacturing organization specializing in comprehensive solutions for medical devices, sterile packaging and other advanced engineered custom products. The company’s single-use and single-patient products support minimally invasive surgery, infection prevention, wound care, wearables and orthopedic care. UFP boasts a strong acquisition pipeline, completing three deals in the second quarter of 2026 and recently expanding its capabilities through the acquisition of CI Medical.
Presently, UFPT carries a Zacks Rank #2. The Zacks Consensus Estimate for the company’s 2026 EPS and revenue implies 8% and 9.1% growth, respectively.
View the Zacks #1 Rank List
Image: Bigstock
3 Medical Instruments Stocks Banking on GenAI to Tackle Industry Woes
Generative AI (GenAI) is gaining practical applications across the Medical Instruments industry, moving beyond its experimental phase. Companies are using it to generate synthetic medical images, simulate disease progression, create potential drug molecules and predicttheir effects, helping accelerate the drug development process.In McKinsey’s fourth-quarter 2025 survey, 50% of U.S. healthcare leaders reported GenAI implementation, while more than 80% had deployed initial use cases. Although administrative efficiency has the greatest perceived potential, clinical productivity became the most widely adopted GenAI application among care organizations.
Meanwhile, the FDA recently released a discussion paper, Considerations for the Regulation of Generative AI-Enabled Medical Devices, highlighting the technology’s potential benefits and risks. GenAI-enabled devices could transform patient care but may also introduce risks that differ from traditional software and AI-enabled devices. The paper seeks stakeholder input on these challenges and regulatory approaches.The European Union AI Act (EU AI Act) 2024 also introduced strict requirements for high-risk AI systems, including AI-based medical software.
Fortune Business Insights projects the global AI in the healthcare market to expand at a CAGR of 43.9% through 2026-2034. Despite industry pressures, Veracyte (VCYT - Free Report) , Globus Medical (GMED - Free Report) and UFP Technologies (UFPT - Free Report) are well-positioned to benefit from continued AI adoption.
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 Zion Market Research, global GenAI in the healthcare market is projected to expand at a CAGR of 31.4% between 2026 and 2034. Growth is supported by the increasing use of AI-powered medical imaging, accelerated drug discovery, automated clinical documentation and growing physician burnout, which is boosting demand for intelligent workflow tools across hospitals, pharmaceutical companies and payers globally.The application of AI in the diagnostics space is growing enormously, with the market expected to witness a CAGR of 28.6% through 2026-2034.
M&A Trend: The medical instrument space has been benefiting from the ongoing merger and acquisition (M&A) trend. Smaller and midsized companies are turning to consolidation to gain scale and strengthen their competitive position, while larger players are pursuing acquisitions to enter niche markets and add specialized products and technologies to their portfolios. According to PWC’s Medtech: US Deals 2026 midyear outlook, Medtech M&A entered the second half of 2026 with continued momentum, supported by investment in innovation-led areas such as cardiovascular and neurostimulation, expansion into connected care and workflow platforms and continued carve-outs, take-privates, and other portfolio reshaping activity.Deal value reached $36.5 billion in the first half, following a decade-high level of M&A activity in 2025. Notable transactions included Boston Scientific’s $15 billion agreement to acquire Penumbra and Danaher’s $10 billion acquisition of Masimo. Medtronic also recently completed its $650 million acquisition of SPR Therapeutics, Inc., consisting of an upfront cash payment.
Business Trend Disruption: The IMF’s July 2026 World Economic Outlook projects global growth of 3% in 2026 and 3.4% in 2027, below the 3.5% average observed in 2024-25 but broadly unchanged from its April forecast on a cumulative basis. The slowdown reflects the drag from the Middle East conflict, partly offset by stronger demand from the global technology cycle as AI advances and adoption The effects vary across countries, depending largely on their exposure to the conflict and their role in the technology supply chain. Global headline inflation is expected to rise from 4.1% in 2025 to 4.7% in 2026 before easing to 3.9% in 2027. The projections were revised slightly higher from April, suggesting that the disinflation trend that began in early 2024 has stalled. The possibility of renewed Middle East conflict looms large and could extend commodity price volatility, disrupt supply chains, raise prices and weigh on financial conditions.
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 #99, which places it in the top 40% of 248 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 lagged the Zacks S&P 500 composite and the sector over the past year. The industry has declined 2.5% against the broader sector’s rise of 11.8%. The S&P 500 has returned 19% 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 25.97X compared with the broader industry’s 21.30X and the S&P 500’s 20.09X.
Over the past five years, the industry has traded as high as 41.07X, as low as 24.72X and at the median of 31.39X, 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
Veracyte: Based in California, Veracyte is a cancer diagnostics company, offering tests for prostate, thyroid, bladder and breast cancer. In the United States, it provides laboratory-developed tests through CLIA-certified labs in South San Francisco and San Diego, while the Prosigna breast cancer test is available internationally through laboratories and hospitals as an in vitro diagnostic. Its Afirma test leads the thyroid nodule molecular diagnostics market, driven by greater use among existing physicians, an expanding ordering-physician base and market share gains.
Veracyte sports a Zacks Rank #1 (Strong Buy) at present. The Zacks Consensus Estimate for the company’s 2026 EPS and revenues calls for 8.4% and 14.4% growth, respectively.
You can see the complete list of today's Zacks #1 Rank stocks here.
Price & Consensus: VCYT
Image Source: Zacks Investment Research
Globus Medical: Based in Pennsylvania, Globus Medical is a renowned musculoskeletal technology company, advancing care throughout spine, orthopedic trauma, joint reconstruction, biomaterials and enabling technologies. In 2023, the company expanded its spine business through the NuVasive merger and broadened into neuromodulation and pain treatment with the Nevro acquisition in 2025. Globus Medical’s International sales represented 21% of total net sales in the first half of 2026, spanning 61 countries outside the United States.
At present, GMED carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate calls for 25.4% EPS growth and 8.8% revenue growth for the company in 2026.
Price & Consensus: GMED
Image Source: Zacks Investment Research
UFP Technologies: Massachusetts-based UFP is a contract development and manufacturing organization specializing in comprehensive solutions for medical devices, sterile packaging and other advanced engineered custom products. The company’s single-use and single-patient products support minimally invasive surgery, infection prevention, wound care, wearables and orthopedic care. UFP boasts a strong acquisition pipeline, completing three deals in the second quarter of 2026 and recently expanding its capabilities through the acquisition of CI Medical.
Presently, UFPT carries a Zacks Rank #2. The Zacks Consensus Estimate for the company’s 2026 EPS and revenue implies 8% and 9.1% growth, respectively.
Price & Consensus: UFPT
Image Source: Zacks Investment Research