The Strategic Shift: Why Cooper Investors Exited GE Healthcare and What It Means for AI-Driven Medtech Exposure

The recent decision by Cooper Investors Global Equities Fund to divest its stake in GE HealthCare (GEHC) in 2025 marks a pivotal moment in the evolving healthcare investment landscape. This move, driven by a reevaluation of risk-adjusted returns and a pivot toward AI-driven medtech opportunities, underscores a broader industry trend: the acceleration of artificial intelligence (AI) adoption in healthcare and its implications for portfolio reallocation. By dissecting the financial and strategic dynamics behind this shift, investors can better navigate the high-tech healthcare sector's evolving risk-return profile.

The Case for Exiting GE Healthcare

GE Healthcare's performance in 2025, while resilient, failed to meet the expectations of growth-oriented investors like Cooper. Despite a 4% year-over-year revenue increase in Q3 2025, the company's stock underperformed, declining 5.4% year-to-date in 2025 compared to gains in the S&P 500 and its medical equipment peers according to Nasdaq analysis. This underperformance, coupled with geopolitical headwinds-such as a 15% revenue decline in China due to trade tensions-prompted Cooper to prioritize assets with higher growth potential.

Valuation metrics further justify this exit. While GEHC appears undervalued based on a DCF analysis ($124.93 intrinsic value vs. current price) and a low PE ratio of 16.6x according to Yahoo Finance, these metrics reflect a company in transition rather than one with explosive growth. Analysts project a fair value range of $73–$106 per share, suggesting limited upside compared to the high-growth AI medtech sector. For Cooper, the calculus was clear: reallocating capital to AI-driven opportunities offered a superior risk-reward profile.

The AI-Driven Medtech Boom: A New Frontier

The AI in healthcare market is expanding at an unprecedented pace. Valued at $29.01 billion in 2024, it is projected to surge to $504.17 billion by 2032, growing at a 44.0% CAGR. This growth is fueled by AI's transformative impact across diagnostics, drug discovery, and operational efficiency. For instance, AI in drug discovery is expected to grow from $0.9 billion in 2023 to $4.9 billion by 2028, driven by reduced R&D timelines and costs.

Investors like Cooper are capitalizing on this momentum. NVIDIA reported that 81% of organizations saw increased revenue from AI deployments in 2025, with nearly half achieving ROI within a year. Its Clara AI platform, used for medical imaging and genomics, exemplifies the sector's potential. Similarly, Medtronic's AI-integrated solutions highlight tangible benefits of AI in clinical workflows.

Risk-Adjusted Returns: Balancing Growth and Volatility

While AI-driven medtech offers compelling growth, it is not without risks. The sector faces challenges such as data privacy concerns (e.g., the 2023 23andMe breach) and high implementation costs. Additionally, 80% of healthcare AI initiatives fail due to execution gaps, underscoring the need for robust governance. However, the ROI metrics are hard to ignore: 82% of healthcare organizations report moderate to high ROI from AI, with efficiency gains of 30% and diagnostic speed improvements of 40% according to Strativera analysis.

Comparing risk profiles, NVIDIA's healthcare AI segment exhibits higher volatility due to its reliance on cutting-edge technology and market demand fluctuations. In contrast, GEHC's diversified portfolio-spanning imaging, diagnostics, and pharmaceutical solutions-offers stability but limited growth. For Cooper, the trade-off between GEHC's steadiness and AI medtech's high-growth potential appears to favor the latter.

Implications for Investors

The strategic shift by Cooper Investors signals a broader reallocation of capital toward AI-driven innovation. For investors, this highlights the importance of evaluating risk-adjusted returns through a dual lens:
1. Growth Potential: AI medtech's projected 44% CAGR dwarfs GEHC's 3.4% five-year revenue CAGR according to FinBox data, making it a more attractive long-term bet.
2. Risk Mitigation: While AI adoption carries execution risks, the sector's ROI and efficiency gains according to VentionTeams data justify its inclusion in diversified portfolios. Investors should prioritize companies with strong governance frameworks and proven AI integration, such as NVIDIA and Medtronic.

Conclusion

Cooper Investors' exit from GE Healthcare reflects a calculated move toward higher-growth, AI-driven opportunities in a sector poised for disruption. While GEHC remains a foundational player in healthcare, its current valuation and growth trajectory pale in comparison to the explosive potential of AI medtech. As the industry navigates regulatory and operational challenges, investors who align their portfolios with the AI revolution may capture outsized returns-provided they balance innovation with risk management.