UnitedHealth Group:A Healthcare Giant Undervalued Amid AI GrowthUnitedHealth Group NYSE:UNH , the largest health insurer in the U.S., has faced turbulence, with its stock dropping from $600 to $295.57-a 53.1% decline since its peak. Despite challenges, UNH presents a compelling value play, leveraging AI to drive growth and efficiency. Here’s why investors should consider this healthcare titan at its current price.
A Rough Road: DOJ Probe and Public Backlash
UNH’s recent struggles stem from two major events. In December 2024, Brian Thompson, CEO of its insurance division, passed away in New York City, sparking criticism of UNH and the U.S. health insurance system. Following this, the U.S. Department of Justice launched an investigation in early 2025, alleging potential Medicare fraud through inflated treatment costs in UNH’s Medicare Advantage business. These events have shaved over $225 billion off UNH’s market cap since November 2024, bringing it to $264.80 billion.
However, such challenges are not something new for large corporations. Historically, giants like UNH settle regulatory issues with fines rather than severe penalties. Warren Buffett’s Berkshire Hathaway NYSE:BRK.A remains a major shareholder, signaling confidence in UNH’s governance and long-term stability.
Financial Strength and Undervaluation
Despite the selloff, UNH’s fundamentals remain robust. The stock trades at a P/E ratio of 11.4x, down from 17 earlier in May 2025, reflecting the price drop. Analysts project 2025 EPS at $30, implying a forward P/E of 9.7-a bargain for a company of UNH’s stature. Its 3.1% dividend yield, bolstered by 15 years of consecutive increases, adds income appeal. With a market-leading position, serving ~150 million individuals globally, and strong cash flows, UNH is well-positioned to weather short-term storms.
AI: A Catalyst for Growth
UNH is harnessing AI to transform its operations. Handling ~5 billion claims annually, the company uses AI to automate claims processing, reducing costs and boosting margins. AI also analyzes patient data to assist doctors with treatment decisions, enhancing care quality. Beyond internal efficiency, UNH aims to monetize this technology by selling AI solutions to other insurers and medical institutions, opening a new revenue stream. Such moves and steps in this way aligns with UNH’s broader strategy of leveraging technology to modernize healthcare, as seen in its Optum division’s focus on data analytics and pharmacy services.
Investment Case: Buy on Weakness?
At $295.57, UNH is undervalued, offering a margin of safety for long-term investors. Its forward P/E of 9.7 and 3.1% dividend yield make it attractive, while AI-driven growth positions it for future gains. Risks remain, as usual-regulatory fines and market volatility could pressure the stock-but healthcare’s resilience and UNH’s leadership mitigate these concerns. Investors seeking a stable, growth-oriented play in a turbulent market may find UNH as a pretty well buy case.
