Is Intuitive Surgical Worth the Premium? A February 2026 Investment Perspective

When evaluating a company’s investment merit, one of the most important considerations is whether the current price reflects fair value or unfounded expectations. Intuitive Surgical presents exactly this dilemma for investors in early 2026. The company, a leader in surgical robotics, finished its 2025 fiscal year with encouraging momentum, yet its valuation tells a different story than most market participants.

The Intuitive Surgical Business Model: Beyond Hardware Sales

At its core, Intuitive Surgical manufactures and sells the da Vinci surgical robotic system—a market-leading innovation in minimally invasive surgery. However, understanding the company’s true revenue engine requires looking beyond the robots themselves.

The hardware represents a smaller portion than many might assume. In 2025, surgical robot sales accounted for roughly 25% of total revenue, consistent with the prior year’s 24% contribution. This consistency demonstrates a sustainable business model rather than a temporary situation. The remainder of revenue comes from a combination of services (approximately 15%) and consumables—instruments and accessories—which comprise the largest component at around 60% of total sales.

What makes this breakdown strategically significant is the nature of the revenue streams. Approximately 75% of the company’s total revenue is recurring in character. Once a da Vinci system is installed at a hospital, that institution requires ongoing maintenance, replacement instruments, and spare parts. This creates what amounts to a subscription-like cash flow engine that strengthens with each new system deployment.

The installed base reached 11,106 da Vinci systems globally by year-end 2025, representing a 12% increase from the prior year. More importantly, the utilization of these systems is accelerating. Surgical procedures performed on da Vinci systems grew 18% year-over-year, significantly outpacing the growth rate of newly installed units. This indicates robust demand for the technology and suggests that each existing system generates more revenue than it did previously.

Growth Catalysts and the AI-Driven Opportunity

The trajectory of procedure growth has management projecting further expansion, with surgical volume expected to climb as much as 15% during 2026. This acceleration is supported by multiple growth catalysts, most notably the integration of artificial intelligence into the company’s surgical platform.

Intuitive Surgical has already begun embedding AI-assisted capabilities into its products to enhance surgeon performance. The company obtained FDA clearance in late 2025 for an AI tool that delivers real-time visual enhancements during lung biopsy procedures. While this may appear incremental on the surface, the application is particularly valuable because lung tissue movement during respiration renders pre-operative imaging outdated by the time surgery commences. AI-guided real-time imaging adaptation addresses this critical technical challenge.

Looking ahead, the potential applications extend well beyond current capabilities. The prospect of AI eventually automating aspects of surgery represents a transformative long-term opportunity. Whether this materializes within five years or twenty remains uncertain, but the trajectory is clear: artificial intelligence will play an expanding role in surgical robotics.

Valuation Reality Check

Wall Street has clearly recognized Intuitive Surgical’s competitive moat and growth prospects. The stock currently commands a price-to-earnings ratio near 67 times, a significant premium to the S&P 500, which trades at a 28 P/E ratio despite operating near record valuations.

For investors with a value investing philosophy, this valuation presents a substantial hurdle. However, the historical context provides some nuance. Over the past five years, Intuitive Surgical’s average P/E multiple reached nearly 72 times. The current 67x multiple, while still elevated, represents relative value improvement compared to that five-year average.

To further contextualize the valuation, the typical growth stock (using the Vanguard Growth ETF as a benchmark) trades at just under 40x earnings. Intuitive Surgical sits well above this peer group, a reminder that investors are pricing in substantial long-term expansion.

Investment Considerations and Risk Factors

For anyone contemplating a position in Intuitive Surgical, one critical reality deserves emphasis: patience is not optional—it is fundamental. The stock has experienced drawdowns exceeding 30% on multiple occasions throughout its history. These are not temporary hiccups; they represent meaningful declines that test investor conviction.

This characteristic creates two investment scenarios. First, if you possess genuine long-term conviction and can tolerate significant interim volatility without panic selling, you may find Intuitive Surgical’s growth story compelling despite its current price. Second, if you anticipate difficulty holding through extended periods of underperformance, waiting for a substantial market-driven pullback may prove a more prudent entry strategy.

Making Your Investment Decision

The analysis ultimately reveals a company with legitimate competitive advantages and expanding opportunities, particularly as AI enhances surgical capabilities. Yet Wall Street’s enthusiasm has thoroughly priced these strengths into the current stock price. The question is not whether Intuitive Surgical possesses attractive growth prospects, but rather whether those prospects are worth a 67x earnings multiple at this moment.

Consider that Motley Fool’s Stock Advisor service recently identified what their research team views as the ten most attractive opportunities in the current market environment—and Intuitive Surgical did not make that list. This underscores that even among growth-oriented investor strategies, the valuation challenge is real.

Your decision ultimately rests on your investment time horizon, risk tolerance, and conviction in the surgical robotics thesis. For patient, growth-focused investors, Intuitive Surgical merits serious consideration. For others, the premium valuation may warrant continuing to evaluate this company from the sidelines.