Healthcare ETFs to Buy as Big Pharma Rapidly Integrates AI

Artificial Intelligence (AI) is no longer confined to the tech sector; it is being aggressively integrated across all industries, from defense to food processing, with healthcare being no exception. Over the past couple of years, AI integration in the U.S. healthcare industry has increased manifold. According to an IDC report commissioned by Microsoft and released in March 2024, 79% of healthcare organizations were already utilizing AI technology.

This rapid integration has been evident through strategic partnerships between major pharmaceutical companies such as Eli Lilly LLY, Johnson & Johnson JNJ and AbbVie ABBV, and AI-centric tech giants like Palantir PLTR and Nvidia NVDA.

By accelerating drug discovery, streamlining clinical trials, and automating administrative tasks, these AI collaborations are expected to cut billions in costs, enhance operational efficiency and enable faster breakthroughs. This, in turn, is likely to bolster the underlying healthcare stocks and, by extension, strengthen the performance of healthcare exchange-traded funds (ETFs) that provide exposure to them.

Now, before suggesting healthcare ETFs that you may consider adding to your portfolio to benefit from AI-driven growth in the sector, let’s take a closer look at these partnerships to understand how AI is transforming the healthcare industry.

Notable Pharma-Tech Collaborations

Big Pharma's accelerated AI adoption is best illustrated by its strategic collaborations with AI-centric tech stocks:

•    In October 2025, it was announced that Eli Lilly is partnering with NVIDIA to build an "AI Factory," leveraging the NVIDIA Blackwell DGX SuperPOD to power the world's most powerful AI supercomputer dedicated to drug discovery. This is aimed at compressing decades of research into instantly accessible intelligence, dramatically accelerating the time from target identification to clinical candidate.

•    JNJ has been working with NVIDIA for more than a year to scale AI for use in surgery. This collaboration is aimed at delivering real-time analysis and AI-powered insights within the operating room, using advanced computing platforms to enhance surgical decision-making and training. 

In October 2025, the company revealed that it is using an AI-driven simulation to train clinical teams on the MONARCH robotic platform for urology. To achieve this, JNJ is leveraging NVIDIA’s Isaac and Omniverse platforms to create high-fidelity digital twins of the system and patient anatomy, enabling teams to practice robot setup and simulate kidney stone procedures in a virtual operating room. The company is also using NVIDIA Cosmos for generating accurate, physics-based synthetic data, enhancing learning and procedure planning prior to surgery.

•    Meanwhile, AbbVie uses Palantir's Foundry platform as the data management backbone (Fusion) for its global operations. Foundry allows AbbVie to unify disparate data sources, manage complex clinical trial data, and streamline supply chains, significantly boosting operational efficiency and accelerating drug development.

These deep, transformative collaborations between pharmaceutical and AI companies are creating a powerful flywheel effect of innovation and efficiency, directly aiding the growth prospects of the healthcare sector.

Healthcare ETFs to Buy

Looking ahead, the global AI in healthcare market — valued at $26.57 billion in 2024— is projected to reach $505.59 billion by 2033, at a CAGR of 38.81%, according to a report by Grand View Research. To capitalize on this AI-driven healthcare revolution, one can invest in the following couple of healthcare ETFs to tap the powerful growth opportunities offered  by big pharma stocks, especially those mentioned above:

Vanguard Health Care ETF VHT

This fund, with assets worth $16.2 billion, offers exposure to 398 companies that are primarily involved in the research, development, production, and marketing of pharmaceuticals and biotechnology products. LLY holds the first spot in this fund with 11.25% weightage, ABBV holds the second spot with 5.24% weightage and JNJ holds the fourth spot with 4.54% weightage. 

VHT has surged 12.3% year to date. The fund charges 9 basis points (bps) as fees. It sports a Zacks ETF Rank #1 (Strong Buy) at present. 

Health Care Select Sector SPDR ETF XLV

This fund, with assets under management (AUM) worth $39.01 billion, offers exposure to 60 companies in the pharmaceuticals; health care equipment and supplies; health care providers and services; biotechnology; life sciences tools and services; and health care technology industries. LLY holds the first spot in this fund with 15.08% weightage, JNJ holds the second spot with 8.81% weightage and ABBV holds the third spot with 7.44% weightage. 

XLV has soared 11.6% year to date. The fund charges 8 bps as fees. It sports a Zacks ETF Rank #1 at present.

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This article originally published on Zacks Investment Research (zacks.com).

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