2 ASX healthcare shares to buy now for the AI revolution

Experts expect mouth-watering growth from AI for these healthcare companies.

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If you're looking to capitalise on the artificial intelligence (AI) revolution, you might consider investing in ASX healthcare shares.

The Australian market has rallied behind AI stocks recently, and there may be many more beneficiaries in the pipeline.

ResMed Inc (ASX: RMD) and Integral Diagnostics Ltd (ASX: IDX) are two standout ASX healthcare shares. According to experts, both companies are set to benefit from AI advancements, making them potentially attractive healthcare options.

ASX healthcare shares to surge

ResMed is in the sleep disorder treatment business. Trading at $31.06 per share at the time of writing, the company shows significant growth potential due to the increasing prevalence of obstructive sleep apnoea (OSA), according to analysts at Bell Potter.

Estimates are that more than a billion people globally suffer from OSA, with many still undiagnosed. Bell Potter projects this under-penetration provides a massive growth opportunity for ResMed.

The broker gave ResMed a buy rating with a $36.00 price target, saying the company's competitive edge was bolstered by the ongoing recall of competitor Philips' respiratory devices and improved semiconductor availability.

Bell Potter expected industry volume growth "to continue in the 6-8% range for the foreseeable future", adding that ResMed was "well-positioned to build on its dominant share even after Philips returns to the global market".

The broker forecasts device sales to grow sequentially throughout 2023 and beyond, driven by the launch of ResMed's latest CPAP device, the AirSense 11.

AI enhances Integral Diagnostics' potential

Integral Diagnostics is another ASX healthcare share that I believe will benefit from AI advancements. Integral provides diagnostic imaging services such as MRIs and CTs across Australia and New Zealand.

Boutique investment manager Firetrail identifies Integral as a key beneficiary of AI and "teleradiology", which it says could significantly enhance the company's productivity and earnings before interest, tax, depreciation and amortisation (EBITDA) margins.

If you think about it, AI has the potential to revolutionise diagnostic imaging. Firetrail believes it can "identify abnormalities and draw radiologists' attention to areas of concern, allowing for faster assessments".

My colleague Bronwyn explained in April that, currently, AI tools apply to only 5% of Integral's scans. But management expects this to increase by 200–300% by the end of FY 2025.

This boost in productivity could enable radiologists to assess up to 1,000 scans per day, compared to the current 200.

AI's impact on ASX healthcare shares

AI integration in healthcare is transforming the outlook for many ASX healthcare shares. It offers potentially significant benefits for companies such as ResMed with its innovative sleep disorder treatments and Integral Diagnostics' AI-enhanced diagnostic services.

AI-driven tools not only enhance operational efficiency but also open new avenues for growth and profitability. And it appears the experts agree that investing in certain ASX healthcare shares can position investors to benefit as AI revolutionises the healthcare sector.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Integral Diagnostics. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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