1 stock of medical devices perfectly prepared for the use of artificial intelligence

Artificial intelligence (AI) is ushering in a new era of innovation that has the potential to upend entire industries, and the medical device industry is definitely not immune.

By harnessing the enormous computing power and predictive capabilities of artificial intelligence, medical device manufacturers can accelerate research and development, improve product design, and unlock new treatment pathways that were previously unimaginable.

As the AI ​​revolution gathers pace in healthcare, one company is particularly well-positioned to harness the transformative potential of this powerful technology: Medtronic (MDT -1.11%). Read on to learn more about this innovative medical device company.

A recognized leader in the medical devices industry

As the world’s largest manufacturer of play-only medical devices, Medtronic has long been at the forefront of industry innovation. However, the company is currently using artificial intelligence to maintain its advantage.

Medtronic has made artificial intelligence a key part of its research and development strategy, developing and implementing machine learning algorithms to accelerate the design and testing of new medical devices.

From optimizing device materials and geometries to verifying product performance through virtual simulations, artificial intelligence streamlines Medtronic’s development processes for a broad portfolio of products spanning cardiovascular, surgical and neurological applications.

One of the key areas where Medtronic is using artificial intelligence is diabetes management. The company’s digital twin initiative uses machine learning models trained on real patient data to evaluate product performance and determine optimal therapy settings for different people.

In addition to product innovation, AI also plays a role in Medtronic’s manufacturing operations. AI-powered processes help the company produce reliable devices more efficiently, lowering costs and increasing profit margins.

The best choice for investors looking for dividend growth

While Medtronic is driving the future of medical devices through its artificial intelligence innovations, the company is also an attractive option for dividend growth investors looking for a highly reliable income play.

Medtronic has increased its dividend for 47 years in a row, making it an elite company. At a current dividend yield of 3.3%, it also offers a yield that is almost twice the average S&P500 warehouse.

Medtronic’s current five-year dividend growth rate of 5.3% is below average for this particular peer group. However, the medical device giant has a history of increasing its dividends to above-average levels over the past 10 and 20 years (author’s data).

Once its AI initiatives begin to bear fruit, Medtronic should be able to return to delivering market-leading levels of dividend growth.

Despite its leadership and stability, Medtronic trades at just 15.4 times forward earnings, which is a relatively reasonable valuation compared to other large-cap dividend stocks. Digital payments giant Visafor example, trades fetch almost 25 times futures earnings. These dividend stocks are therefore cheap in their category.

The key was taken away

Medtronic is projected to post mid-single-digit earnings growth in 2025. However, rising demand for healthcare around the world and its AI-powered innovation engine position it for much higher levels of growth in the coming years.

In the meantime, investors can count on a great dividend related to the Titan medical device. Medtronic’s exceptionally low price-to-earnings (P/E) ratio also offers investors a convenient way to add a layer of value to their portfolio.

George Budwell has no position in any of the companies mentioned. The Motley Fool has positions on and recommends Visa. The Motley Fool recommends Medtronic and recommends the following options: long January 2026 calls for $75 at Medtronic and short January 2026 calls for $85 at Medtronic. The Motley Fool has a disclosure policy.