Key Points
Intuitive Surgical (NASDAQ: ISRG) is an aggressive growth stock. That means it is appropriate only for investors who can handle some risk. The risk is on clear display today, with the stock down around 35% from its all-time high, reached in early 2025. But history suggests that this is likely to be a temporary setback. Here’s what you need to know.
What does Intuitive Surgical do?
On the surface, Intuitive Surgical makes da Vinci surgical robots. Indeed, the company is a leader in the surgical robotics space. The technology generally provides for less invasive procedures and better surgical outcomes. And it is being approved for an increasing number of surgical procedures, expanding the playing field even as the number of surgical robots in place increases.
To put a number on this dynamic, Intuitive Surgical had 11,395 da Vinci systems in place at the end of the first quarter of 2026. That was up 12% year over year, but the number of surgeries performed jumped by 17%. This is important because only about 25% of the medical device maker’s revenue comes from robot sales; the rest comes from the sale of services, instruments, and accessories.
The company’s parts and services sales are annuity-like in nature and represent the real flywheel of this healthcare business. Even if the sale of new da Vinci systems were to slow down, the company would still have a strong earnings foundation.
There’s a problem with Intuitive Surgical’s stock
Investors know all about Intuitive Surgical’s growth story. And it has long been afforded a premium valuation. At the early 2025 peak, the price-to-earnings (P/E) ratio was a shockingly high 95x. When companies get to valuations like that, even the biggest bulls can get nervous. The slightest concern can lead to a sell-off. And, as noted above, that’s exactly what has happened. A key issue is the company’s expectation that the number of surgeries performed with a da Vinci robot will increase by 13% to 15% in 2026, a drop from 18% in 2025. Still, the first quarter of 2026 came in above that range, so the company’s guidance may be conservative.
The deep drawdown Intuitive Surgical has experienced has pushed its P/E to 47x. That’s still quite high, noting that the S&P 500 index has an average P/E of 27.5x. But Intuitive Surgical’s five-year average P/E is 68x. Compared to its own trading history, the stock looks relatively cheap.
And, just as important, this isn’t the first time the company’s stock has sold off like this. In fact, it has gone through swings like this at least eight times since its initial public offering. Each time it has, it has eventually gone on to higher highs.
ISRG data by YCharts
To be fair, Intuitive Surgical is up against more competitors today, including medical device giant Medtronic. So it is entirely possible that growth slows somewhat. However, all the da Vinci robots currently in place will continue generating parts and services revenue. And the expanding use of surgical robots will mean that the business has a growth driver beyond the sale of new da Vinci systems. Simply put, the growth story isn’t over here.
Probably worth a look for more aggressive investors
Given the still lofty valuation, Intuitive Surgical isn’t going to interest value investors. And it doesn’t pay a dividend, so income investors won’t find it appealing, either. However, if you are a more aggressive growth investor, this drawdown could open up a buying opportunity. At least, that’s what history suggests. But be prepared to hold for the long term if you do buy the stock, because history also shows that this stock’s drawdowns can get even deeper and last for a few years.
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Reuben Gregg Brewer has positions in Medtronic. The Motley Fool has positions in and recommends Intuitive Surgical and Medtronic. The Motley Fool recommends the following options: long January 2028 $520 calls on Intuitive Surgical and short January 2028 $530 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.
