A Rise In Surgical Robotics Could Send These 2 Healthcare Stocks Soaring

Key Points

• The robotic-assisted surgery market is expected to grow significantly in the coming years.

• Intuitive Surgical is the leader in this space and should profit from its rapid growth.

• Relative newcomer Medtronic could also cash in as it launches its Hugo device.

• 10 stocks we like better than Intuitive Surgical ›

The use of robotics in surgery is on the rise. The market was valued at $800 million in 2015, and has since risen to over $3 billion. One reason behind this rapid growth is that these robot systems utilize flexible, highly maneuverable instruments along with tiny cameras, allowing surgeons to perform complex procedures, often of the minimally invasive type. Compared to open surgeries, they result in less skin cutting, less bleeding, and less scarring.

However, according to one survey, while 78% of U.S. surgeons are interested in the technology, many still aren't using it, leaving significant white space ahead. The increased adoption of surgical robotics could prove to be a massive tailwind for some healthcare leaders, including Intuitive Surgical (NASDAQ: ISRG) and Medtronic (NYSE: MDT).

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Image source: Getty Images.

1. Intuitive Surgical

Intuitive Surgical is currently the leader in robotic surgery, thanks to a lineup of products that includes the Ion system, which aids in performing lung biopsies, and the renowned da Vinci system, indicated for a range of procedures in general surgery and many other areas.

The da Vinci system is perhaps the best-known robot device on the market. It was first approved in 2000. Intuitive Surgical has since launched several newer versions of this product; the fifth generation was introduced last year.

Having a first-mover advantage will help Intuitive Surgical in at least three ways as the market expands significantly. First, the company has established a brand name among physicians, who, like everyone else, tend to gravitate toward brands they trust, especially when lives are at stake.

Second, since the da Vinci system has been in use for so long, a substantial amount of data from clinical trials and real-world applications demonstrates its efficacy. That's always an advantage in the healthcare industry.

Third, Intuitive Surgical has a significant existing installed base. It ended the second quarter with 10,488 installed da Vinci systems, for a 14% year-over-year increase. These are expensive devices, so healthcare facilities won't switch unless they have a very strong incentive, which grants Intuitive Surgical a strong moat thanks to high switching costs.

Meanwhile, the company has routinely recorded excellent financial results:

ISRG Revenue (Annual) data by YCharts.

Intuitive Surgical is facing some headwinds, including increased costs resulting from tariffs. Even with those, shares should perform well over the long run as the company's products continue to gain traction in the underpenetrated and rapidly growing robotic surgery industry. Despite its underperformance in the market this year, the stock still looks like a buy today.

2. Medtronic

Medtronic is inching closer to making its grand entrance in the U.S. surgical robotics industry. Earlier this year, it reported that its device, the Hugo system, had been successful in clinical trials for urologic procedures.

The company is now awaiting clearance from the U.S. Food and Drug Administration in that indication. Medtronic decided to pursue this opportunity precisely because it saw massive white space. A couple of years ago, management pointed out that less than 5% of procedures that could be performed with robotic assistance actually were at the time.

The company is likely to seek additional approvals for its Hugo system. While it will take some time to have a meaningful impact, Medtronic's venture into this market could be an important addition over the long run for a company that has been struggling to grow its revenue at a satisfactory rate. Medtronic has made other changes to its business recently, including deciding to spin off its only consumer-facing segment, diabetes care, whose margins were lower than those of the rest of the business.

Medtronic also faces tariff-related challenges, but the decision to separate from its diabetes unit should help. Furthermore, the company consistently delivers strong financial results despite economic and other challenges. That's due to its extensive and diversified portfolio of products across several therapeutic areas, and significant presence in 150 countries worldwide.

MDT Revenue (Annual) data by YCharts.

Lastly, the company has a brilliant dividend track record; having increased its payouts for 48 consecutive years, it's closing in on Dividend King status. Medtronic's stock remains a top choice for income seekers, particularly given the significant growth opportunity its launch of the Hugo system is expected to provide.

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Prosper Junior Bakiny has positions in Intuitive Surgical. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool recommends Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.