What’s Happening With Intuitive Surgical Stock?

January 7th, 2026 by Trefis Team
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ISRG: Intuitive Surgical logo
ISRG
Intuitive Surgical

ISRG stock has surged nearly 40% from its October 2025 lows of around $425, now trading around $590. What drove this impressive run?

The catalyst was clear: exceptional Q3 2025 earnings that crushed expectations. The company delivered a powerful one-two punch—procedure volume growth of 20% year-over-year across its da Vinci and Ion systems, well above management’s own guidance, combined with an acceleration in system placements to 427 da Vinci units in Q3. That placement number is particularly telling, as it signals robust hospital capital spending and strong demand for the newest da Vinci 5 platform. Management responded by revising guidance upward, and the market rewarded them handsomely.

The $600 Question! So after a 40% rally, is ISRG still a buy at levels around $600? We think yes—and here’s why this situation differs markedly from typical “chase the rally” scenarios. But before we dive into the details, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics. Separately, see – How Can Google Stock Fall?

The Valuation Reality Check

Undoubtedly, ISRG looks extraordinarily expensive by conventional metrics:

  • Price-to-Sales ratio: 22.1x versus 3.3x for the S&P 500
  • Price-to-Free Cash Flow ratio: 93.4x compared to 21.2x for the S&P 500
  • Price-to-Earnings ratio: 77.2x versus 23.8x for the benchmark

You’re paying nearly seven times the market multiple on a P/S basis and more than three times on a P/E basis. That’s not a premium—that’s stratospheric.

But here’s the critical context that changes everything: Is ISRG expensive, or is it just being ISRG?

The Historical Valuation Perspective

This is where the analysis gets interesting. ISRG has consistently traded at premium valuations for years:

  • Average P/S ratio over the last five years: Around 20x
  • Average P/E ratio over the same period: Around 76x

Current multiples of 22.1x P/S and 77.2x P/E are actually right in line with—not above—its historical averages. So while ISRG looks expensive versus the market, it’s trading at a normal price relative to its own history.

Why does ISRG command such a persistent premium? Because it operates with a near-monopoly in robotic surgical platforms. When you dominate a high-growth, mission-critical market with significant barriers to entry, the market grants you a valuation umbrella that doesn’t apply to ordinary companies.

Is the Growth Story Intact?

Absolutely, and it’s accelerating:

  • 16.3% average annual revenue growth over the past three years (nearly triple the S&P 500’s 5.6%)
  • 22.2% growth from $7.9 billion to $9.6 billion over the last 12 months
  • The most recent quarter showed 22.9% growth to $2.5 billion

Look at Intuitive Surgical’s Revenue Comparison for more details on the company’s top-line performance.

Notice the trend? Growth isn’t just strong—it’s accelerating. The 22.9% quarterly growth significantly exceeds the three-year average of 16.3%. That’s not what you typically see in a mature company, and it validates the premium valuation.

But Can ISRG Actually Convert That Revenue Into Profit?

This is where ISRG truly separates itself from the pack. The profitability profile is exceptional:

ISRG generates $2.8 billion in operating income on $9.6 billion in revenue. Those are software-like margins in a healthcare equipment business. This is the key difference from Amazon’s situation—ISRG combines high growth with high profitability, not high growth with moderate profitability.

When you’re paying 77x earnings, but the company generates 28.6% net margins that are more than double the market average, the valuation math starts to make sense.

But How Strong Is the Balance Sheet?

ISRG’s balance sheet is pristine—perhaps one of the cleanest you’ll find in any industry:

  • Debt-to-Equity ratio: 0.0% (yes, zero debt) versus 20.2% for the S&P 500
  • Cash-to-Assets ratio: 25.4% versus 7.2% for the benchmark
  • $4.9 billion in cash with literally no debt

Zero debt in a capital-intensive medical device business is remarkable. This gives ISRG unlimited flexibility for R&D investment, acquisitions, or weathering any downturn without financial stress.

How Does ISRG Handle Market Turbulence?

The downturn data shows a familiar pattern for high-multiple growth stocks:

  • Inflation Shock (2022): ISRG fell 49.9% from November 2021 to October 2022—nearly double the S&P 500’s 25.4% decline. It recovered to pre-crisis levels by January 2024.
  • COVID Pandemic (2020): ISRG fell 40.5%, worse than the market’s 33.9% drop. However, it recovered within four months—quite fast, given that elective surgeries were completely shut down during lockdowns.
  • Global Financial Crisis (2008): ISRG plummeted 75.9% versus 56.8% for the S&P 500. Recovery took about one year.

What does this tell us? ISRG is volatile during downturns—high-multiple stocks always get hit harder. But the recovery times are reasonable, and the stock has consistently reached new highs after each crisis.

Putting It All Together

Let’s synthesize the complete picture:

  • Growth: Very Strong ✓
  • Profitability: Very Strong ✓
  • Financial Stability: Very Strong ✓
  • Downturn Resilience: Moderate
  • Overall Performance: Very Strong

Here’s the crucial difference from a typical “expensive stock” situation: ISRG’s very high valuation is justified by very strong fundamentals across nearly every metric. This isn’t paying 77x earnings for 10% margins and 10% growth—it’s paying 77x earnings for 28.6% margins and 22% growth, with zero debt and a dominant market position.

Why We Think ISRG Remains Attractive

Several tailwinds support continued strength:

  • First, hospital capital spending is increasing after years of constraint. Hospitals delayed major equipment purchases during COVID and the subsequent inflationary period—that pent-up demand is now being released.
  • Second, the da Vinci 5 platform is driving an upgrade cycle. Hospitals that already have older da Vinci systems are upgrading to the latest technology, creating a replacement demand on top of new adoption.
  • Third, procedure volumes are growing at 20%—faster than system placements. This means installed systems are being utilized more intensively, driving high-margin recurring revenue from instruments and accessories.
  • Fourth, ISRG’s competitive moat remains intact. Despite years of predictions that competitors would erode its dominance, ISRG maintains its near-monopoly position in robotic surgery.

What’s the Risk?

The primary risk is straightforward: ISRG is highly sensitive to adverse events at this valuation. Any of these could trigger a sharp correction:

  • A credible competitive threat emerging
  • A broader market downturn that pressures high-multiple stocks
  • Hospital spending cuts due to economic weakness

At 77x earnings, there’s no room for error. The valuation assumes continued strong execution, and any stumble would likely result in a multiple compression.

See, investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

The Bottom Line

Is ISRG expensive? By conventional market standards, absolutely. But is ISRG overvalued? That’s a different question. When you’re paying premium multiples for premium fundamentals, the valuation can be justified.

Unlike Amazon, where you’re paying high multiples for moderate profitability and hoping margins expand, with ISRG, you’re paying high multiples for already-exceptional profitability that continues to grow. Also, see how Intuitive Surgical’s growth and margins significantly outpace those of its peers.

The key insight is this: ISRG isn’t trading at a premium to its own historical valuation—it’s trading in line with it. The market has consistently valued ISRG at 20x+ sales and 75x+ earnings because the business quality warrants it. As long as the fundamentals remain very strong—and right now they’re accelerating, not decelerating—the valuation framework should hold.

For investors willing to accept the volatility that comes with high-multiple stocks and who believe in the long-term growth of robotic surgery, ISRG remains attractive, even at $600.

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