Is Intuitive Surgical Stock a Buy? Here’s Why Cathie Wood and Izzy Englander Think So

In the volatile world of stock picking, following the moves of top-tier investors can be a valuable strategy. Currently, medical device pioneer Intuitive Surgical (NASDAQ: ISRG) is attracting significant attention for being held by two Wall Street heavyweights: Cathie Wood, CEO of ARK Invest, and Izzy Englander, founder of the hedge fund Millennium Management.

Navigating Headwinds

Intuitive Surgical, the company behind the revolutionary da Vinci surgical system, enjoyed a near-monopoly in robotic-assisted surgery for nearly two decades. However, the competitive landscape is shifting dramatically.

Medtronic’s Hugo system is poised to challenge da Vinci in urology, with strong clinical trial results suggesting U.S. regulatory approval is likely. Furthermore, Medtronic plans to expand Hugo’s applications into other surgical domains where da Vinci is currently used. Johnson & Johnson could also enter the fray in the coming years with its Ottava system.

Beyond rising competition, tariff pressures present another challenge. With significant manufacturing located outside the U.S., Intuitive has already felt a financial impact from tariffs, which could further pressure operating profits if unresolved.

Perhaps most notably is the stock’s valuation. Trading at a forward P/E of 48, it significantly outpaces the healthcare sector’s average of 17.4. This premium valuation has contributed to the stock underperforming the broader market this year.

The Bull Case: Why Top Investors Are Buying

Despite these challenges, savvy investors like Wood and Englander see a resilient long-term business model and a durable competitive moat.

The “Razor-and-Blade” Model: Intuitive’s strategy extends far beyond selling multi-million dollar da Vinci systems. Each system sale establishes a new installed base within a hospital. This creates a recurring, high-margin revenue stream from the proprietary instruments and accessories consumed with every procedure. As the installed base grows, these high-profit recurring sales become a larger portion of revenue, driving margin expansion.

Massive Growth Runway: Intuitive is positioned to benefit from long-term demographic tailwinds, including an aging population requiring more surgeries. Medtronic estimated years ago that less than 5% of eligible surgeries were performed robotically—a figure that likely remains low today. This indicates a vast market still to be penetrated. The clinical benefits of robotic-assisted minimally invasive surgery, such as reduced blood loss, smaller scars, and faster recovery, provide a powerful driver for continued adoption.

Capacity to Manage Short-Term Risks: The company has multiple levers to pull against tariff risks, including applying for exemptions, strategic price increases, or adjusting its global supply chain. Against new competitors, Intuitive’s first-mover advantage, vast installed base, and the high switching costs for hospitals form a formidable defense.

Conclusion: Is the Premium Worth It?

Intuitive Surgical has historically commanded a high valuation, backed by its consistent above-average revenue growth, stable profitability, and leadership in a high-potential industry. For investors with a decade-long horizon, the current premium may be justified by the company’s immense growth potential. This appears to be the core logic behind the bets placed by Wood and Englander—a perspective that warrants a closer look from any long-term investor.