Intuitive Surgical Is the Robotic-Assisted Surgery Leader, but Medtronic Is Making Moves. Here's What Investors Need to Know.

There is a lot to like about Intuitive Surgical (NASDAQ: ISRG) and one very notable thing to dislike. And once you see the problem, you'll instantly understand why medical device competitor Medtronic (NYSE: MDT) could be a more attractive investment option. But the real story here is about what's yet to come for Medtronic.

Here's what you need to know.

Intuitive Surgical has an attractive business

There is absolutely nothing wrong with Intuitive Surgical's business. In fact, the da Vinci surgical robot is industry-leading technology. And it is still selling well, with 427 new systems put in place in the third quarter of 2025, up from 379 in the same quarter of 2024. That brings the total number of da Vinci systems to 10,763. Worldwide, there were 20% more procedures handled by this medical device maker's surgical robots year over year.

That's interesting because only around 25% of the company's top line comes from robot sales. The rest of sales are derived from what amount to parts and services for those robots, which is an annuity-like income stream. Every new da Vinci that gets placed increases the power of the parts and services flywheel Intuitive Surgical has built.

The problem is that Wall Street is well aware of the business's many strengths. The valuation of Intuitive Surgical's stock is, well, rich. As an example of the problem, the price-to-earnings ratio is a lofty 72. That's basically in line with the five-year average P/E, so historically speaking the valuation could be viewed as reasonable. But 72 is a huge P/E on an absolute basis. This is very clearly a growth stock, which may put off more value-oriented investors.

Image source: Getty Images.

Medtronic is a value-priced alternative

You don't have to miss out on the opportunity presented by surgical robots if you think a P/E of 72 is too high. You can, instead, buy healthcare giant Medtronic, which has a P/E of roughly 25. Notably, that P/E is below the stock's five-year average P/E of just under 30. So this looks a lot more like a value opportunity than Intuitive Surgical, though a P/E of 25 is hardly low on an absolute basis.

Medtronic's Hugo surgical robot is starting to gain traction and has the same broad potential as the da Vinci system over the long term. But it is just one product among many that Medtronic has to offer, with other surgical tools, cardiovascular products, and neuroscience products rounding out the mix. The company also has a business around diabetes, but that's going to be spun off in 2026.

The diabetes spinoff is actually part of the reason why investors should be attracted to Medtronic. It is a large and diversified business and it has gotten a little bogged down by its size. That's not unusual and the normal solution is a company overhaul, which is what Medtronic is currently doing. The big goal is to improve profitability by cutting costs and refocusing on its best product opportunities.

The diabetes spinoff is a big win for investors because it will be immediately accretive to earnings. This indicates that the rest of the business is simply more profitable than diabetes. And it highlights the general direction in which Medtronic is heading. On top of that are the opportunities presented by new products, like the Hugo surgical robot. New product introductions should be extra impactful on growth after the diabetes spinoff, so now could be a good time to step aboard Medtronic.

Dividend investors have an extra opportunity

So investors who want to get in on the surgical robot opportunity without paying a premium price for Intuitive Surgical should consider Medtronic and its increasingly profitable business. But there's more to the story because Medtronic has a 3.1% dividend yield that's backed by 48 consecutive annual dividend hikes (two short of Dividend King status). That should interest dividend lovers, too, noting that the yield is near the high end of the stock's historical yield range.

A big yield and a big growth opportunity is a hard combination to ignore.

Reuben Gregg Brewer has positions in Medtronic. 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.