Should You Buy Shares of Intuitive Surgical In February?

Core Insights - Intuitive Surgical ended 2025 with strong earnings, placing 532 da Vinci surgical robots in Q4, a 7.9% increase from 493 in Q4 2024, with a total of 11,106 systems globally, reflecting a 12% year-over-year growth [1][5] Company Overview - Intuitive Surgical specializes in the da Vinci surgical robotic system, with robot sales contributing approximately 25% of total sales in 2025, consistent with 24% in 2024 [2] - The majority of revenue comes from services, instruments, and accessories, with instruments and accessories accounting for about 60% of overall sales, while services represent roughly 15% [3] Revenue Model - Approximately 75% of the company's revenue is recurring, driven by the need for maintenance and parts for the da Vinci systems, which creates a stable income stream that grows with each new unit installed [4] - In 2025, there was an 18% increase in procedures performed using the da Vinci system compared to 2024, indicating strong demand for surgical robots, with projected surgery growth of up to 15% in 2026 [5] Future Opportunities - The integration of artificial intelligence into products presents significant future growth opportunities, including a recently FDA-approved AI tool for real-time visual enhancements during lung biopsies [6] - The potential for AI to eventually perform surgeries autonomously is a long-term consideration for the company [6] Market Valuation - Intuitive Surgical's stock is currently trading at a price-to-earnings (P/E) ratio of nearly 67x, compared to the S&P 500's P/E ratio of 28x, indicating a premium valuation [7] - Historically, the company's average P/E over the past five years was nearly 72x, making the current valuation relatively more attractive, although still higher than the average growth stock's P/E of just under 40x [8] Investment Considerations - The company has significant growth potential in surgical robotics, but the stock is priced accordingly, suggesting that long-term holding may be necessary for investors to realize returns [9]