Prediction: Intuitive Surgical Will Be Worth $500 Billion by 2031 -- Here's Why

Intuitive Surgical (NASDAQ: ISRG) has delivered growth to investors over time, and this may be far from over. This is because the robotic surgery giant has the complete package of elements that make a fantastic long-term investment: leadership in its industry, a strong moat, a well-established track record of growth and solid long-term prospects, and a smart business model.

In fact, I think Intuitive Surgical is such an outstanding company that I predict this player, now worth $150 billion, may climb to $500 billion by 2031. Let's zoom in for a closer look.

Image source: Getty Images.

A global market leader

So, first, let's consider the elements that make Intuitive Surgical a great investment, starting with its leadership and moat. The company's flagship Da Vinci surgical robot is the global market leader and is used for a wide range of common minimally invasive procedures, from hernia repair to gallbladder surgery. Intuitive Surgical launched its first Da Vinci in 2000 and since has released five generations of systems -- so these devices are deeply integrated across hospitals worldwide.

The company has a tremendously strong moat, or competitive advantage, due to the following: Most surgeons train on the Da Vinci, so they are likely to continue with a system they know well. Meanwhile, hospitals invest millions of dollars in these systems, so it's logical that they would continue with the same platform rather than switch to another.

Intuitive Surgical has demonstrated growth over time, with increases in the number of systems placed and procedures performed on them. For example, in the recent quarter, the company grew its install base to 11,395 systems, an increase of 12% from the year-earlier period. And worldwide Da Vinci procedures advanced 16%.

All of this has translated into steady earnings growth.

ISRG Revenue (Annual) data by YCharts

And, considering the Da Vinci's solid presence across the world, it's likely that revenue from these robots will continue to generate growth for the company. This brings me to my next point about the business model. Intuitive Surgical doesn't just generate revenue through the sales of systems; it actually brings in even more revenue through the sales of accessories and instruments needed for Da Vinci procedures. This creates a recurrent revenue stream. So the sales or leasing out of a Da Vinci is just the start of the revenue opportunity for Intuitive Surgical.

The biggest driver of revenue

Here are some numbers to illustrate this: In the recent quarter, while the company delivered $650 million in revenue from the placement of systems, it brought in $1.6 billion from the sales of instruments and accessories. So the actual use of the Da Vinci systems is key to revenue generation -- and allows for a great deal of future growth.

Now, let's return to my prediction. For Intuitive Surgical to reach a market capitalization of $500 billion, the stock would have to gain 200% to reach about $1,500 per share. While this may be ambitious, it's possible.

Intuitive Surgical's revenue has nearly doubled over the past five years. If it were to do the same over the next few years, that would put annual revenue at about $20 billion. At a market cap of $500 billion, that would give the company a price-to-sales ratio of 25, a level that it's traded at before in recent times.

ISRG PS Ratio data by YCharts

As hospitals seek to improve efficiency and better use resources, we could see increased use of robotic surgical systems. And Intuitive Surgical's latest Da Vinci -- the Da Vinci 5 -- could also boost revenue in the quarters to come, as it offers doctors and hospitals a significant number of advancements. The new system includes 150 design innovations and a massive amount of computing power to improve operating room workflows and offer surgeons greater autonomy.

All of these elements support my prediction that Intuitive Surgical could roar higher to $500 billion by 2031. And even if it doesn't make it to that level, the stock still has what it takes to deliver great long-term returns to shareholders.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool recommends the following options: long January 2028 $520 calls on Intuitive Surgical and short January 2028 $530 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.