Cathie Wood names AI’s most overlooked game-changing application

Ark Invest chief executive Cathie Wood says the most under-appreciated application of artificial intelligence is “healthcare”.

The use of AI in healthcare will contribute significantly to curing diseases over time, she said in a CNBC interview on Tuesday.

Wood expects gene sequencing and drug discovery stocks in particular to benefit as artificial intelligence continues to reshape healthcare as we know it.

Here are the top 2 biotech stocks she’s convinced stand to benefit from AI in 2025.

Recursion Pharmaceuticals Inc (NASDAQ: RXRX)

Cathie Wood is bullish on Recursion Pharmaceuticals as it’s use of artificial intelligence has increased the “number of hypotheses per researcher for new drugs by tenfold in just one year.”

She recommends owning the biotech stock also because AI could help bring more love to the Phase 1 and Phase 2 studies by lowering the number of failures and accelerating the time to market.

“I think the most profound application of artificial intelligence is in healthcare,” she said today on “Squawk Box”.  

Wood remains bullish on Recursion Pharmaceuticals stock even though it came in below Street estimates in its latest reported quarter.

In November, RXRX reported a per-share loss of 34 cents for its Q3 on $26.08 million in revenue.

Analysts in comparison had called for 33 cents a share of loss on $34.87 million in revenue.

Recursion shares do not currently pay a dividend either.

But the company is strongly positioned to improve its financials as it continues to integrate artificial intelligence into its operations, according to Cathie Wood.

Analysts at Needham seem to agree with her positive view on Recursion Pharmaceuticals.

The investment firm sees upside to $11 in the EV stock that indicates potential for another 45% gain from current levels.

Illumina Inc (NASDAQ: ILMN)

Illumina stock sliding sharply on Tuesday after China added it to its list of unreliable entities.

This means Beijing could soon announce sanctions on the biotech company, including fines, revoking of work permits for foreign staff, or other punitive actions.

But Cathie Wood dubbed the sell-off a buying opportunity today as she’s convinced Illumina will play a central role in curing diseases in the long run by leveraging artificial intelligence for gene sequencing.

In November, Illumina reported its quarterly earnings that topped Street estimates.

Illumina stock may be worth owning at current levels also because Wall Street as a consensus “overweight” rating on it at writing.

Analysts see upside in ILMN to $162 on average that indicates potential for a 30% rally from here.