When it comes to making surgical robots, Intuitive Surgical (ISRG 0.59%) is the undisputed king of the hill. Its popular Da Vinci robotic surgical suites are distributed worldwide, and more practitioners are trained on its use every month. 

But will its reign last through 2033, or will a challenger threaten its currently cushy position? To answer this question, let's map out this company's next decade. 

More robots, more customers, and more procedures

The first thing to appreciate about Intuitive Surgical is that its penetration of global markets is proceeding at a consistent and sustainable pace that's unlikely to slow anytime soon. In 2022 alone, Da Vinci systems were used to perform more than 1.8 million procedures, bringing the company's lifetime total procedures to above 12 million. To achieve that impressive sum, from 2019 through 2022, its base of installed Da Vinci units grew at a compound annual rate of 12%, most of which was concentrated in the U.S. By 2033, the business's center of gravity may have moved outside the U.S. as it's likely that most of its hardware will be abroad.

Regardless of where they're located, sourcing sales from existing customers is likely to be a major driver of growth. In 2022, the company reported $6.2 billion in revenue, up 174% from 10 years prior. Intuitive already derives 81% of its revenue from recurring sales of tools, software, maintenance services, and other consumables.​​ In time, that proportion might grow even further, which would contribute to the stock's reputation for consistent growth. For now, demand for new Da Vinci units remains quite strong, and rising procedure volumes are a given. 

Once hospitals are performing operations with the Da Vinci, they're incentivized to participate in the product ecosystem to maximize the capabilities of their units. Plus, as each system costs between $500,000 and $2.5 million (before taking into account the value of the time spent training surgical staff), there's a significant degree of customer lock-in and sunk costs. Count on robust customer retention to be an enduring feature of this company.

In Q1, the number of hospitals globally with more than seven Da Vinci systems rose by 57% compared to a year prior, indicating that larger buyers are pleased enough with their purchases to keep requisitioning new systems. As the company keeps investing in research and development (R&D), it'll be able to develop new types of consumables and surgical tools, not to mention scanning devices and software packages that customers are sure to want. 

Furthermore, expect Intuitive to keep investigating whether its robots are suitable for new surgical niches. Though it can probably continue to grow as a result of capturing some of the growth in the demand for general surgical procedures, management has stated that diversifying into surgical specialties beyond urology and bariatrics is a priority.

While it's possible that such diversification efforts will yield tremendous new revenue if they succeed, investors should probably expect incremental additions to the top line as new surgical indications are approved by regulators over time. Training surgeons to use the robots takes time, and hospitals will likely be slow to adopt fresh uses for the technology until there's a critical mass of both social and clinical proof of the benefits.

Separately, it's currently working to increase the efficiency of its manufacturing operations by taking advantage of economies of scale. As its output of new systems, tools, and consumables continues to scale up over the coming years, assuming that procedure volume and its base of installed units continue to increase, too, it's reasonable to expect that Intuitive's cost of goods sold (COGS) will decrease as a proportion of revenue. Currently, its COGS is 34% of its quarterly sales, but over the last three years, efficiency improvements have already started to drive it down, so shareholders are already reaping some of the benefits.

Will competitors become a problem?

Intuitive Surgical's positioning over the next 10 years is incredibly strong, and it will probably be a good investment between now and then. The biggest long-term risk it faces is from competition, which is inevitable.

At the moment, there aren't any competitors contesting the company's market share, though powerful medtech players like Stryker, Medtronic and Johnson & Johnson all have their own robotic surgery products that target different markets, like knee replacements and orthopedic surgery. Though none of those businesses focus solely on surgical robotics the way Intuitive does, they all have considerable resources, and eventually they might seek growth by entering its markets with their updated robots or successor systems.

The impact would be slowly building pressure on Intuitive's profit margin, which is likely to start to occur with gusto by the early 2030s if not before. There is also a distant chance that Intuitive will decide to enter the markets of its competitors. But that will probably be a recourse only if top-line growth slows because Intuitive has reached the bottom of the general surgery market, which is extremely improbable.

In sum, the Intuitive Surgical of 2033 will likely still be a dominant player in the robotic surgery market, and it'll almost certainly be far bigger than it is today, even without any major changes to its business model.