Healthcare Stocks Thrive as AI Technology Shares Struggle in 2025

In 2024, artificial intelligence (AI) technology stocks spearheaded a rise in the Nasdaq-100 index, while healthcare stocks faced challenges partly due to concerns over Robert F. Kennedy’s nomination for Health and Human Services Secretary and its implications for the industry. Notably, three technology stocks were among the top four performers of the Nasdaq-100 that year:

This trend has shifted significantly in 2025. Investors have expressed disappointment in the technology sector, whereas healthcare stocks have surged ahead in the U.S. market. As of March 9, Gilead Sciences (NASDAQ: GILD) stands out as the best performer in the Nasdaq-100 index, boasting a year-to-date return of 27%.

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Here’s what investors should know.

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Technology Stocks Like AppLovin, Palantir, and Nvidia Experience Significant Declines

AppLovin offers ad tech software for mobile application developers, utilizing AI to enhance marketing and monetization strategies. After a strong fourth quarter, where revenue surged 44% to $1.3 billion and non-GAAP net income tripled, the stock took a 47% hit from its peak this year, primarily due to harsh criticisms from short sellers.

Palantir, known for its data analytics software serving commercial and governmental clients, was recently recognized for its leadership in decision-intelligence software by the International Data Corporation (IDC). Despite consistently exceeding Wall Street forecasts last year, the stock has fallen 32% from its highs due to worries related to insider selling and potential cuts to the Pentagon budget.

As the market leader in data center graphics processing units (GPUs), Nvidia plays a critical role in enhancing AI workloads. However, 25% off its peak, the stock is facing investor concerns about sustainable AI infrastructure spending and export restrictions affecting profitability.

Despite these setbacks, Wall Street maintains a largely bullish outlook on AppLovin, Palantir, and Nvidia. The median target prices for these stocks suggest considerable upside potential for shareholders, as shown below:

• AppLovin’s median target price of $555 per share suggests a 132% increase from its current price of $239.
• Palantir’s median target price of $97 indicates a 22% upside from its current price of $79.
• Nvidia’s median target price of $175 implies a 65% potential rise from a current price of $106.

The strong upward trend of healthcare sector stocks in 2025 underscores the importance of portfolio diversification. Gilead Sciences, in particular, deserves investor attention.

Upcoming Catalysts Could Boost Gilead Sciences Stock

Gilead Sciences specializes in pharmaceuticals with a solid foothold in HIV and oncology markets, notably developing the first once-daily tablet for HIV treatment. They were also pioneers in gaining approval for a pre-exposure prophylaxis (PrEP) HIV medication to prevent infections in high-risk adults.

In its Q4 earnings report, Gilead exceeded Wall Street’s expectations, with revenue climbing 6% to $7.6 billion due to increased sales across HIV, oncology, and liver disease segments, despite a decline in Veklury sales, an injectable COVID-19 treatment. Non-GAAP net income rose 10% to $1.90 per diluted share.

Several potential catalysts may propel Gilead shares higher in the near future. The company expects regulatory approval for twice-yearly lenacapavir injections for HIV pre-exposure prophylaxis in the U.S. and Europe this year. Clinical trials have shown the drug to be effective in reducing infection risk and even outperforming Truvada, the current treatment standard.

Additionally, Gilead is awaiting updates on two phase-3 clinical trials involving Trodelvy. Recently, the FDA designated Trodelvy as a breakthrough therapy for extensive-stage small cell lung cancer (SCLC). Investors are particularly keen on efficacy updates regarding its use as first-line treatment for metastatic triple-negative breast cancer.

CEO Daniel O’Day highlighted Gilead’s expansive clinical program for HIV vaccines during their Q4 earnings call:

As we shared at our HIV analyst day in December, we have a broad and unmatched clinical program for both HIV treatment and prevention that builds on what we currently offer with Biktarvy and Descovy. We expect to deliver up to seven potential new HIV treatment options and two prevention options before the end of 2033.

Even after its strong performance, Gilead shares are reasonably priced. Analysts project a 32% annual growth in adjusted earnings over the next two years, making the current price-to-earnings (PE) ratio of 25 look fair in context. Moreover, the forward PE ratio of 14.8 is lower than the one-year average of 16.6, suggesting investors may find good value in a small investment today.

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*Stock Advisor returns as of March 10, 2025.

Trevor Jennewine holds positions in Nvidia and Palantir Technologies. The Motley Fool has positions in and recommends AppLovin, Gilead Sciences, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.