Shares of Intuitive Surgical (NASDAQ: ISRG), the leader in robotic-assisted surgery, have tumbled more than 30% since the start of 2026. If the decline holds through year-end, it would mark the company’s worst annual performance since 2008. Yet Wall Street analysts remain nearly unanimous in their buy ratings, showing little alarm over the deep sell-off.
The sell-off was not triggered by deteriorating results but by cooling growth expectations. In the second quarter, worldwide procedure volume rose 16% year over year and revenue grew 19%, still a double-digit expansion. However, the company guided full-year procedure growth to a range of 13.5% to 15.5%, below what some investors had anticipated. Attention has turned to slower procedure growth in the U.S., particularly for surgeries that can be postponed.
At the same time, the competitive landscape has shifted. Johnson & Johnson’s Ottava robotic surgical system has received regulatory clearance for use in various soft-tissue procedures, and Medtronic’s Hugo robotic-assisted surgery system won clearance last year. Intuitive Surgical still controls more than 70% of the global robotic surgery market, but the arrival of new entrants has prompted some investors to question whether the stock’s premium is justified.
The moat and recurring revenue have not been damaged. Analysts remain optimistic because the core business model is intact. The company benefits from extremely high customer switching costs: surgeons trained on the da Vinci system are accustomed to using it, and hospitals that have invested millions of dollars in the equipment want to amortize that spending. These two factors create a barrier that is difficult for competitors to break.
Recurring revenue is even more important. After a hospital purchases a da Vinci system, it must continue buying the instruments and accessories required for procedures. In the second quarter, instruments and accessories generated $1.7 billion in revenue, while system placements brought in $685 million. Each installed da Vinci system therefore opens a long-term, repeat revenue stream for Intuitive Surgical.
Placement data support this logic. The company placed 468 da Vinci systems in the second quarter, up from 395 in the same period a year earlier. As of June 30, the global installed base reached 11,710 systems, a 12% increase from the prior year. Hospitals continue to invest heavily in robotic systems, which itself serves as a direct endorsement of future surgical demand.
A similar downturn occurred in 2022, when Intuitive Surgical shares fell more than 40% between January and August. During that period, hospitals prioritized COVID-19 patients, many elective surgeries were postponed, and rising interest rates pressured high-valuation growth stocks. In hindsight, that sell-off became a buying opportunity for long-term investors. The stock subsequently recovered and reached a record high last year.
The current decline has already exceeded the 26% drop recorded for all of 2022, yet the company’s fundamentals have not materially deteriorated compared with two years ago. Procedure volume continues to grow, the installed base keeps climbing, and recurring revenue remains stable as a share of total revenue. The only real disagreement is over how much the market should be willing to pay for that growth.
Valuation pressure remains but has eased considerably. For a long time, Intuitive Surgical’s price-to-earnings ratio often hovered near 80, meaning high expectations that left the stock vulnerable to sharp corrections whenever growth slowed. After this year’s decline, the trailing P/E ratio has fallen to 45, and the forward P/E based on analyst earnings estimates for the coming year stands at 36. By comparison, the S&P 500 trades at 26 times trailing earnings and 21 times expected future profits.
Intuitive Surgical is going through a valuation reset driven by lower growth guidance and competitive concerns, not by fundamental deterioration. Installed base growth, the dominance of instrument and accessory revenue, and high switching costs for surgeons and hospitals remain the three pillars supporting the long-term investment case. The premium still exists but has come down sharply from extreme levels. For long-term investors, the current price offers a more reasonable entry point than at any time in the past several years. Analysts are maintaining their buy ratings through the slump because they are betting on a simple combination: the moat is intact, and the stock is now cheaper. For those willing to hold for five years or longer, this may be a window worth evaluating carefully.
