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This past week’s
J.P. Morgan
Healthcare Conference featured dozens of drug and device firms, cash-starved biotechs, and one computer chip maker:
Nvidia
.
Why was the semiconductor producer at a medical conference? Healthcare could become a billion dollar a year market for Nvidia’s number-crunching and artificial intelligence products, writes J.P. Morgan’s semiconductor analyst Harlan Sur, in a note about the chip maker’s Thursday presentation.
Along with other vertical markets such as cloud computing and self-driving cars, the healthcare applications for Nvidia’s technology help diversify the Santa Clara, Calif.-based company beyond the cycles of personal computer graphics. It’s one reason for Sur’s Overweight rating on the $169 stock (ticker: NVDA).
Nvidia’s healthcare vice president Kimberly Powell told Thursday’s J.P. Morgan audience that her company’s medical sales started with radiology systems and surgical robots. Those markets accounted for about 80% of Nvidia medical sales, she said, with perhaps 20% going to AI approaches to drug and genomic discovery. Nvidia has dedicated software and services for all these healthcare applications.
Now, AI-powered discovery and diagnosis is rising toward 50% of Nvidia medical applications, said Powell. Universities, drug giants, and biotechs have AI centers that use Nvidia technology to screen for new drugs or anticipate mutations of the Covid-19 virus. In 2022, researchers were able to use Nvidia-powered systems to predict a protein’s folding, simply from knowing its underlying genetic recipe. The DNA of our genes holds instructions for the proteins that make up our bodies, but before today’s era of AI analysis, the four-letter language of those genes was too inscrutable to infer the shape of a protein from a reading of its DNA code.
Nvidia counts most of the leading research enterprises among its customers, including the Broad Institute of MIT and Harvard,
Regeneron Pharmaceuticals
(REGN), and
Illumina
(ILMN).
Powell said demand for Nvidia-powered computing passed an inflection point recently, as new gene-sequencing systems from Illumina,
Pacific Biosciences of California
(PACB), Singular Genomics Systems (OMIC),
Oxford Nanopore Technologies
(ONTTF), and others bring the cost of reading a person’s complete DNA genome down to a couple of hundred dollars—from the previous cost of over $1,000.
“An explosion of seminal work happened in just the last three months of last year,” Powell told the J.P. Morgan audience. “Healthcare is becoming the absolute largest data-generating industry.”
Write to Bill Alpert at william.alpert@barrons.com
