Intuitive Surgical (ISRG +2.46%) is a healthcare company with the potential to help transform an industry with its robotic-assisted surgical systems. By making surgeries easier and more precise for surgeons, they can improve outcomes for patients and help drive efficiency in the industry as well.
The company has experienced incredible growth over the years, and it has the potential to become much larger and more valuable in the future. But is there enough upside here for this stock to be a millionaire-making investment?
NASDAQ: ISRG
Key Data Points
Could artificial intelligence ramp up demand?
In 2023, Intuitive Surgical reported $7.1 billion in revenue, which rose by 14% from the previous year. The big increase was due to rising demand for instruments and accessories, which are driven by an increase in the number of da Vinci procedures performed.
At $4.3 billion in sales, instruments and procedures make up the most of the company's top line. And with a growth rate of 22%, it's also a fast-growing segment. In addition to posting good top-line growth, Intuitive net income increased by 36% to $1.8 billion.
The great news for investors is there's still a lot more demand and growth on the horizon. According to analysts at Mordor Intelligence, the robotic-assisted surgery system market will be worth $9.5 billion this year. And it will grow at a compounded annual growth rate of approximately 13.5%, reaching a value of $17.9 billion by 2029.
But with artificial intelligence (AI) and next-gen technologies becoming more prevalent and popular thanks to the emergence of ChatGPT in late 2022, healthcare companies may be inclined to invest more money into Intuitive's surgical systems. Meanwhile, Intuitive is also using AI and machine learning to its advantage and to further improve efficiency as well.
The company says that with more than 10 million procedures performed using its da Vinci systems, it is using that data to gather insights and evaluate ways it can help surgeons. Helping them see better by reducing visual noise and assisting with stapling by being able to assess tissue thickness are just a couple of potential ways Intuitive's surgical systems may become even more useful and valuable for surgeons and the healthcare industry.
Demand is growing, and with the help of AI, it could ramp up significantly in the future.
Is there enough room for Intuitive's stock to get a whole lot bigger?
The big question for whether Intuitive Surgical can be a millionaire-making investment comes down to how much more valuable the stock can get. While there's definitely lots of strong demand in the company's future, its market cap is also around $140 billion -- this is not a small, up-and-coming business anymore.
Based on its market cap and the type of return you would need to gain by different investment levels, here's how much larger Intuitive would need to become for your investment to grow to $1 million.
| Investment Amount | Return Required | Intuitive Market Cap |
|---|---|---|
| $10,000 | 100x | $14 trillion |
| $20,000 | 50x | $7 trillion |
| $30,000 | 33x | $4.7 trillion |
| $40,000 | 25x | $3.5 trillion |
| $50,000 | 20x | $2.8 trillion |
Table source: Calculations by author.
If you're looking at a period of 20 or 30 years down the road, it may not be unreasonable to say that Intuitive Surgical grows to a valuation of more than $1 trillion. Intuitive would likely need to become one of the largest, most successful healthcare companies in the entire industry for its valuation to soar well into the trillions, however. It's not an impossible scenario, and certainly not if its devices are used for more surgeries and AI enhances the devices themselves, but it's just not a possibility I think is highly likely.
Should you invest in Intuitive Surgical stock?
Intuitive Surgical is a great healthcare stock, and its da Vinci surgical systems can be transformative for the healthcare industry. Even though the stock may not be likely to grow your investment to more than $1 million (without you investing a significant sum of money, perhaps north of $50,000), you can still earn a great return from holding it for the long haul.
