Healthcare ETFs are hitting one-year highs as the sector benefits from improving earnings visibility, attractive relative valuations, and a rotation out of overcrowded AI and tech trades into defensive growth. State Street Health Care Select Sector SPDR ETF XLV has surged 6.6% over the past month compared with 3.4% gains for State Street SPDR S&P 500 ETF Trust SPY. S&P 500 healthcare companies are expected to deliver double-digit earnings growth from Q4 2026 through 2027, and the sector is expected to log a 21.2% increase in earnings on 2.2% higher revenues, according to Zacks Sector and Market Earnings Trends issued on Aug. 12, 2026. M&A value in the sector has touched nearly $284 billion this year, approaching 2025's total of $306 billion, and hedge fund bets in favor of healthcare stocks recently neared a five-year high, per a Goldman Sachs note. The FDA has accelerated its approval process, with the annual number of new drug approvals in 2025 reaching its highest level since 2020.
AstraZeneca PLCSector earnings growth and M&A activity signal improved demand for healthcare products.
Bristol-Myers Squibb CompanySector earnings growth and M&A activity signal improved demand for healthcare products.
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