Shares of U.S. medical artificial intelligence companies rallied together, lifting a South Korean exchange-traded fund focused on the sector to the top of weekly returns. Tempus AI, the sector's bellwether, jumped more than 30% in a week on expectations for revenue growth, driving gains in the related ETF.
Hana Asset Management's 1Q U.S. Medical AI ETF rose 19.56% over the past week, the highest return among ETFs listed in South Korea, according to ETF CHECK on the 20th.
The product, listed in July last year, invests in 15 U.S.-listed companies tied to medical AI. Its holdings include Tempus AI, an AI-based precision medicine company, along with Recursion Pharmaceuticals, an AI drug discovery firm, gene-editing company Intellia Therapeutics and surgical robotics maker Intuitive Surgical.
The biggest contributor to the recent gains was Tempus AI, which accounts for 28.24% of the portfolio, the largest weighting. Tempus AI rose 31.91% over the past week. The stock extended its advance after founder and Chief Executive Eric Lefkofsky laid out a growth outlook at the Morgan Stanley Global Healthcare Conference on the 15th. Morgan Stanley estimated that Medicare reimbursement coverage could generate an additional $330 million to $400 million in annual revenue from the company's tissue-based cancer test "xT" and liquid biopsy test "xF." Buying interest flowed in quickly as revenue forecasts for Tempus AI were raised.
A broader recovery in investor sentiment toward the healthcare and biotech sectors also supported the ETF's returns. Moderna said on the 19th of last month that it had secured positive results from a Phase 3 trial of intismeran autogene, a personalized messenger RNA cancer vaccine developed jointly with Merck. Moderna shares surged 176.97% in a single day at the time. Buying then spread to companies working on AI-driven precision diagnostics, drug discovery and genetic analysis.
"Since last year, we have viewed healthcare as the industry where AI will have the greatest impact," said Kim Seung-hyun, head of the ETF and quant solutions division at Hana Asset Management. "More recently, AI technology has spread across the healthcare industry, including precision diagnostics, drug discovery and genetic analysis, and the growth potential of these companies is coming into focus in earnest."
