This Often-Overlooked Growth Stock Just Reported An Amazing Quarter. Time to Buy Shares?

Shares of Intuitive Surgical (NASDAQ: ISRG) rose in after-hours trading on Thursday after the surgical robotics specialist reported fourth-quarter results that showed procedure growth holding up and the installed base still expanding.

In the fourth quarter of 2025, Intuitive Surgical's revenue rose 19% year over year to $2.9 billion. And the company's net income surged, rising from $686 million in the year-ago quarter to $795 million.

By almost every metric, the quarter was great. But can the business keep compounding fast enough to justify what investors are paying for the growth stock today?

Image source: Getty Images.

Impressive business momentum

The lifeblood of Intuitive's business is the volume of procedures performed with its minimally invasive robots. Not only do procedure trends highlight the attractiveness of its products to surgeons and hospitals, but procedure growth also helps demand for the company's lucrative recurring revenue lines: service revenue and instruments and accessories sales.

In Q4, Intuitive Surgical's worldwide procedures grew 18% year over year.

And the procedure growth was not confined to one platform.

Fourth-quarter procedures using its flagship Da Vinci platform increased 17% in the quarter, and Ion procedures rose 44%.

That procedure growth translated into broad-based revenue gains. Instruments and accessories revenue rose 17% to $1.7 billion, and service revenue increased 19% to $422 million.

System sales were impressive, too. Intuitive placed 532 Da Vinci systems in the quarter, and 303 of those were its latest Da Vinci 5 systems. Over the full year, Intuitive's installed base of Da Vinci surgical systems grew 12% year over year to 11,106.

Ion shows how Intuitive Surgical can expand its business

Ion -- Intuitive Surgical's robotic-assisted bronchoscopy system -- is still a much smaller business than da Vinci, but its recent rapid growth in procedures suggests it is becoming more important to the company. Further, the company ended 2025 with an active installed base of 995 Ion systems, up 24% year over year. Growth like this from a system beyond its flagship da Vinci system shows how the company can expand its platform over time.

But it's worth noting that Intuitive placed 42 Ion systems in Q4 -- down from 69. So, investors will want to watch for this trend to hopefully reverse at some point. However, it's still good news to see utilization increasing (procedure growth soared even as Ion system placements decreased). This suggests the system is a success with its customers.

The company's financial profile also helps explain the bull case for the stock. In 2025, its total revenue rose to $10.1 billion, up about 21% from $8.4 billion in 2024. And instruments and accessories plus service revenue totaled $7.6 billion, or about 75% of total revenue -- an important factor to keep in mind since that mix helps keep the business model anchored to procedure volume rather than one-time system sales, which are less predictable. Additionally, this helps explain why a year-over-year decrease in Ion system placements in the fourth quarter of 2025 compared to the fourth quarter of 2024 isn't worth fretting over.

Intuitive also notably has significant balance-sheet flexibility. The company reported about $9 billion in cash, cash equivalents, and investments at year-end 2025.

Debt? Intuitive Surgical doesn't have any.

A demanding valuation

But are shares really worth their extremely high valuation? As of this writing, shares trade at about 70 times earnings.

Additionally, management's 2026 outlook implies a slower growth rate than the company delivered for investors in 2025. Management guided for worldwide procedures growth of 13% to 15% in 2026 -- down from 18% growth last year. Of course, the company is notorious for providing conservative guidance. Still, a meaningful slowdown (if one materializes) could be a concern given the stock's high valuation. With a valuation like this, shares could take a big hit if procedure growth cools more than expected.

Ultimately, however, Intuitive Surgical's fourth-quarter results strengthen the case for the stock as a good long-term investment and arguably make shares look like a buy today -- even at this high valuation. The company's core platform is still expanding, and Ion is contributing nicely to the overall business.

Of course, the stock's very high valuation makes this a high-risk investment, so investors should keep their positions in the stock small as a portion of their overall portfolios.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool has a disclosure policy.