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It has been another eventful stretch for the market, with investors juggling higher interest rates, oil prices, geopolitics, and the never-ending debate over whether the AI boom has gone too far.
But underneath all that noise, one of our portfolios has quietly been putting together an impressive run.
The AI Health Care Portfolio is now up 51.7% versus 27.7% for the S&P 500 since we launched it in February 2025. And two stocks in particular are driving those gains: Tempus AI (TEM) and GRAIL (GRAL).
Let’s start with the market before getting into both.
The Market Keeps Absorbing the Punches
September has certainly lived up to its reputation for volatility.
Oil surged above $100 earlier this month as the conflict in the Middle East intensified. Then last week, the Federal Reserve raised interest rates by 25 basis points – its first hike in three years – as inflation remained stubbornly high. Sixteen of 18 Fed policymakers indicated at least one additional hike could be appropriate before year-end.
That combination briefly pushed the 10-year Treasury yield above 5% and put pressure on stocks. Yet the market has continued to absorb the punches. The S&P 500 finished last week roughly flat, while the Nasdaq actually managed a gain thanks largely to strength in semiconductor stocks.
We’re seeing another reversal today. Oil is down more than 3% on hopes for progress in Middle East negotiations at this week’s United Nations meetings, the 10-year yield has slipped back below 5%, and stocks are rallying. The Nasdaq was up roughly 1.5% this morning, led once again by AI and semiconductor stocks.
My view hasn’t changed much. Higher rates and oil prices can create volatility, but I’m far more interested in whether the fundamental investment trends we’re following remain intact.
And one of those trends is getting particularly interesting right now.
Our AI Health Care Portfolio is now up 51.7% since launch, nearly double the S&P 500’s 27.7% return over the same period.
The headline number is impressive, but what’s happening underneath it is even more interesting.
GE HealthCare (GEHC) remains our laggard, down roughly 25%. The company continues pushing deeper into AI, including last week’s launch of CareIntellect for Operations, an AI platform designed to predict hospital bottlenecks up to 72 hours in advance and recommend actions to improve patient flow. Two major academic medical centers will be the first to implement it.
But the real stars have been our other two positions.
Tempus AI: Building the Data Moat
Tempus AI (TEM) is now up about 12% for us after a huge recovery from its lows earlier this year.
And the news flow keeps getting better.
On September 9, Tempus announced it had secured up to $9.5 million in funding from ARPA-H to develop what it describes as the first autonomous clinical AI agent for cardiology. The idea is to create an AI system capable of coordinating care for heart-failure patients as an extension of the clinical team.
Two days later came another announcement that I think may be even more important long term.
Tempus is creating a database containing 100,000 whole genomes paired with patients’ longitudinal clinical outcomes, with an eventual goal of reaching one million genomes. Unlike many existing genome databases, Tempus wants to connect genetic information with what actually happened to those patients – their diseases, treatments, and outcomes.
Think about what that means for AI.
The better the data, the better the models. And Tempus is building one of the most valuable collections of healthcare data in the world. Today, its network connects roughly 65% of U.S. academic medical centers and 55% of U.S. oncologists, while its database contains more than 45 million research records.
That’s the kind of data moat that becomes more valuable as AI improves.
GRAIL: Our 3X Winner Faces a Huge Catalyst
Then there’s GRAIL (GRAL).
This has become one of the biggest winners across our NXT Pro portfolios.
We originally bought GRAIL at $33.44. Last October, we sold half our position at $70.40 for a 110% gain.
I’m glad we kept the other half.
GRAIL is now trading around $109 (up 35% today), putting our remaining position up roughly 226%. The stock has more than tripled from our original purchase price.
And this Wednesday could be one of the most important days in the company’s history.
On September 23, an FDA advisory committee is scheduled to review GRAIL’s application for Galleri, its multi-cancer early detection blood test. The committee will discuss and vote on the application ahead of the FDA’s ultimate approval decision.
This is exactly the catalyst we’ve been waiting for.
Galleri is designed to identify signals associated with more than 50 types of cancer from a blood sample, including many cancers for which there currently isn’t routine screening. It’s intended for adults 50 and older and would be used alongside existing screening methods rather than replacing them.
Commercial adoption is already accelerating even before an FDA decision. Second-quarter Galleri test volume increased 35% to more than 61,000 tests, while Galleri revenue grew 24% to $42.6 million. Through the first half of the year, test volume was up 42%.
FDA approval would represent an entirely different level of validation and could eventually help open the door to broader insurance reimbursement and much wider adoption.
There are no guarantees with an FDA advisory committee, and we should expect volatility around Wednesday’s meeting. That’s one reason I’m glad we already took our original investment off the table and locked in a triple-digit gain last year.
Now we’re playing with the house’s money on the remaining half.
Don’t Wait for the OpenAI IPO
OpenAI and Anthropic could be two of the biggest AI IPOs Wall Street has seen in years.
But investors don’t have to wait for those names to hit the public markets to get exposure to the AI boom.
MarketBeat’s 7 AI Stocks to Buy Now report reveals 7 publicly traded companies already positioned to benefit as the next wave of AI investment moves beyond the private model providers.
These are the stocks investors can buy today, before the IPO crowd rushes in.
Two Different Ways AI Could Change Medicine
What I like most about these two winners is that they demonstrate just how broad the AI healthcare opportunity could become.
Tempus is using AI and enormous amounts of clinical and genomic data to help doctors make better decisions and researchers develop better treatments. GRAIL is attacking one of medicine’s biggest problems from another direction – finding cancer before patients even know they have it.
These aren’t simply companies adding “AI” to a press release. They’re using new technologies to potentially change how diseases are detected, understood, and treated.
Our portfolio’s 51.7% gain versus 27.7% for the S&P 500 tells me we’re on the right track.
And with GRAIL’s FDA advisory committee meeting coming Wednesday, this could be a particularly important week for one of our biggest winners.
Here’s to the future,
Matt McCall
Editor, Market Insights
