Bellevue AI Health

The US labor market data published in February exceeded expectations, while core inflation was in line with forecasts. The FOMC minutes indicate that further rate cuts remain possible should inflation continue to decline, although the US Federal Reserve is likely to pause for the time being.

The MSCI World gained 0.7% in February, while the S&P 500 and the Nasdaq 100 declined by -0.8% and -2.3%, respectively. The healthcare sector advanced 2.9%, driven by pharmaceutical stocks and healthcare services providers. The Bellevue AI Health Fund (+2.3%) also delivered a positive performance but lagged its benchmark.

Biopharma (58.6% weighting at month-end) contributed 3.4% to absolute and 0.3% to relative performance. The main performance drivers were Novartis (+14.3%), Merck (+12.3%), and Johnson & Johnson (+9.9%), while Novo Nordisk (-36.0%), Recursion Pharmaceuticals (-12.4%), and Genmab (-9.0%) detracted. In February, broadly diversified investors increasingly rotated into defensive names, particularly large-cap biopharma stocks. Novartis is a representative example. Fourth-quarter results were solid, and the outlook for fiscal year 2026 was in line with market expectations. In addition, management expressed confidence in the existing product portfolio. Novo Nordisk shares, by contrast, came under significant pressure. The company disappointed with its fourth-quarter 2025 results and guided for an unexpectedly pronounced decline in revenue and operating profit in 2026. Additional uncertainty stemmed from Phase III data for CagriSema, which performed statistically significantly worse than Eli Lilly’s competing product tirzepatide in a head-to-head study.

The medtech segment (26.8%) detracted -0.9% from absolute performance and -0.2% from relative performance. The strongest positive contributions came from Hoya (+8.1%), Medline (+7.5%), and Abbott (+6.5%), while Boston Scientific (-17.8%), EssilorLuxottica (-13.1%), and Thermo Fisher (-9.9%) weighed on performance. Abbott recovered roughly half of the prior month’s share price decline, supported by encouraging results at Exact Sciences; the completion of the acquisition is expected in the second quarter of 2026. Boston Scientific, however, disappointed with lower-than-expected sales for Watchman and in pulsed-field ablation, as well as a cautious outlook for organic revenue growth in 2026.

Healthcare services (9.4%) contributed 0.3% to absolute performance but detracted -0.4% from relative performance. McKesson (+18.8%), HCA Healthcare (+8.5%), and UnitedHealth (+2.2%) contributed positively, while Omada Health (-17.9%), Elevance (-7.4%), and BillionToOne (-7.5%) detracted. McKesson exceeded earnings expectations and raised its guidance. The share price decline of Omada Health was primarily driven by AI-related disruption concerns in the software sector rather than by its operational performance, which remains intact. High regulatory barriers in healthcare are likely to substantially mitigate potential disruption risks.

The technology segment (3.1%), which includes companies from the healthcare and information technology sectors, detracted -0.3% from both absolute and relative performance. Veeva (-10.7%) came under pressure amid GenAI-related disruption concerns, similar to Omada Health. Nvidia (-7.3%) reported excellent fourth-quarter results but failed to meet investors’ very high expectations with its 2026 outlook.

All performance data in USD / B shares.

The rapid development of generative artificial intelligence (GenAI) is ushering in an unprecedented technology-driven transformation that ranks alongside milestones such as the internet, cloud computing and the smartphone. This creates substantial opportunities for companies and investors, particularly in the healthcare sector. A number of studies conclude that healthcare is among the sectors likely to benefit most from the adoption of GenAI, driven by its significant potential for efficiency gains, the large volumes of available data and the substantial financial resources within healthcare systems.

We already see today how drugs are being developed more quickly and with higher probabilities of success, how new diagnostic and treatment methods are leading to better clinical outcomes, and how GenAI is helping healthcare professionals make more informed and better decisions. We focus on healthcare companies that use GenAI as a core element of their business strategy and invest substantial resources in this technology, as this can deliver a sustainable competitive advantage and support above-average value creation. The technology risk is more manageable, given that healthcare is a highly regulated sector.