Trump's Tariffs Could Impact This Top Growth Stock. Here's Why It's Still a Buy

President Donald Trump's macroeconomic policies are creating significant uncertainty. His decision to impose sweeping tariffs on goods imported into the U.S. could harm the economy and specific corporations in ways that are scaring off investors. Some companies are already factoring the impact of tariffs on their financial results. One of them is Intuitive Surgical (NASDAQ: ISRG), a leader in medical devices. Despite the predicted effect of tariffs on the company's financial results for the rest of the year, the maker of robotic-assisted surgery (RAS) devices still looks like an excellent stock to buy. Here's what investors need to know.

Blowout results but with a twist

The past 18 months have been productive for Intuitive Surgical. Early last year, it earned approval for the fifth generation of its best-known RAS device, the da Vinci system. The launch of this upgraded device exceeded analysts' expectations. It made a meaningful impact on the company's quarterly placement of da Vinci systems. Meanwhile, Intuitive Surgical continues to post strong earnings. In the first quarter, the company's revenue increased to $2.25 billion, a 19% year-over-year rise, driven by a 17% increase in da Vinci procedures. Intuitive Surgical sold 367 da Vinci systems in the period (including 147 of the fifth generation), compared to 313 in the comparable period of the previous fiscal year.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

It ended the quarter with an installed base of 10,189 systems, 15% higher than the year-ago period. Lastly, Intuitive Surgical's adjusted earnings per share increased to $1.81, a 21% year-over-year rise.

That's all well and good, but here's the issue. Intuitive Surgical projected that its adjusted operating expenses for the full year 2025 would grow between 10% and 14%, compared to 10% growth in the previous year. It expects its adjusted gross profit margin to narrow to 65% to 66.5%, down from 69.1% in 2024. The medical device specialist said that its forecast includes an estimated 1.7% (at the midpoint) impact from tariffs on its revenue -- a meaningful, though not a catastrophic, amount. If the tariffs stay in place, that could turn into something even worse. Still, that need not scare investors off.

Focus on the long game

Intuitive Surgical manufactures 98% of its robotic systems in the U.S. However, 70% of its endoscopes are made in Europe, while 80% of its instruments and accessories are manufactured in Mexico. Newly announced tariffs in the U.S. will disrupt this complex system, but Intuitive Surgical is taking the wait-and-see approach. The situation remains somewhat uncertain. After imposing expanded tariffs on most countries that exceed the baseline 10% tariffs, Trump decided to pause these plans for 90 days. What will the administration do next? It's hard to say.

However, Intuitive Surgical will explore ways to mitigate the impact of these tariffs once the situation stabilizes. Considering the effect isn't catastrophic for now, that's a good approach, in my view. Intuitive Surgical's shares soared on the heels of its earnings release, indicating that despite the impact of tariffs, the company's financial results and outlook were strong enough. It's also worth reviewing the company's long-term prospects. Intuitive Surgical is the undisputed leader in the RAS market, which has room for significant growth for at least two reasons.

First, the market is underpenetrated. Few surgeries that can be performed robotically currently are despite their minimally invasive advantages. Second, there will be higher demand for the services Intuitive Surgical offers in the long run due to an aging population and increased spending on medical services. Further, the company benefits from a first-mover advantage in an industry with significant barriers to entry (both regulatory and high start-up costs), and it boasts high switching costs, too.

During the next decade, the company should remain the top player in the field while still delivering excellent financial results despite the impact of tariffs. So, the healthcare stock is a buy for long-term investors despite the challenging and uncertain environment we face.

Should you invest $1,000 in Intuitive Surgical right now?

Before you buy stock in Intuitive Surgical, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Intuitive Surgical wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $607,048!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $668,193!*

Now, it’s worth noting Stock Advisor’s total average return is 880% — a market-crushing outperformance compared to 161% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 28, 2025

Prosper Junior Bakiny has positions in Intuitive Surgical. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool has a disclosure policy.