There are many aspects of Intuitive Surgical's (ISRG 2.77%) business to appreciate. However, as famous investor Benjamin Graham one said, a good company can be a bad investment if you pay too much for it. After a big rally in Intuitive Surgical's price following third-quarter earnings, is the stock worth buying in December?
What does Intuitive Surgical do?
From a big-picture perspective, Intuitive Surgical makes surgical robots. It was one of the first to market with a robotic-assisted surgery (RAS) system, and its products are highly respected. At the end of the third quarter of 2025, there were 10,763 of its da Vinci surgical robots operating around the world.
Image source: Getty Images.
The opportunity for surgical robotics is huge. That's highlighted by two other statistics from the third-quarter earnings report. The medical device maker had 13% more da Vinci systems in place year over year, but the number of surgeries performed by its robots increased 20%. There is clearly strong demand for medical procedures that make use of surgical robots.
There's even a link to artificial intelligence (AI). The company is already integrating AI into its products and services. However, in the longer term, it isn't too hard to envision a robotic system performing surgeries independently, perhaps with a human assistant. This is why Intuitive Surgical appears in some exchange-traded funds (ETFs) that are focused on AI.
That said, the real story with Intuitive Surgical isn't really the robots it sells. The installed base of RAS systems is important because it creates an annuity-like income stream -- consisting of services, and sales of instruments and accessories. Together, these two revenue sources make up around 75% of the top line of the company's income statement.
Without question, Intuitive Surgical is a growth stock. But going back to Benjamin Graham: Is the stock worth buying in December? Or is the price so high that investors are better off watching from the sidelines?
A quick recovery after third-quarter earnings
In October, shortly before Intuitive Surgical reported third-quarter earnings, its stock price hit its 52-week low. At that point, the shares had fallen roughly 30% from their 52-week highs. In hindsight, it was a good time to buy the stock: Its price took off like a rocket after the strong third-quarter sales results, gaining more than 20% in a little over a month.
NASDAQ: ISRG
Key Data Points
The swift price move has pushed shares back into overvalued territory. The price-to-sales (P/S) ratio is currently 21, versus a five-year average of 18.5. The price-to-earnings (P/E) ratio is 73.5, compared to a five-year average of 72. And the price-to-book-value (P/B) ratio is 11.6, versus a five-year average of 9.3.
The stock looks expensive compared to its own history. Of course, the valuation metrics are also high compared to the broader market -- the S&P 500 index's average P/E is roughly 28.5.
This is a good company that looks fully valued
The current valuation says nothing about the quality of Intuitive Surgical's business. Without a doubt, the company offers a high-quality product that's well-received by the healthcare markets it serves. The installed base of da Vinci surgical robots generates a solid recurring revenue stream and is expected to continue doing so for years to come.
The problem is that investors are clearly aware of the opportunity here and have factored it into the stock price. With such a high valuation compared to other companies, Intuitive Surgical is only appropriate for more aggressive growth investors. However, with the valuation relative to the company's own history also hinting at an expensive share price, even those investors may want to think twice about buying this stock in December.
