U.S. Healthcare Spending Just Hit $5.7 Trillion and Continues to Grow: 2 Stocks to Buy to Profit From the Trend

Americans continue to spend more on healthcare. Last year, the sector reached $5.7 trillion, according to some estimates, up 7.3% from 2024. Several factors drove this surge, including higher consumption of medical products and services. Further, the sector should continue expanding over the long run, driven by breakthroughs and an aging population. Investing in companies that can ride this tailwind may be a good way to earn superior returns over the long run. Here are two excellent stocks to consider along those lines: Eli Lilly (NYSE: LLY) and Intuitive Surgical (NASDAQ: ISRG).

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1. Eli Lilly

Not all corners of the healthcare industry will grow at the same rate. Some should expand much faster than others. The GLP-1 drug market is one area that is currently on fire and is projected to maintain a strong momentum well into the next decade. Eli Lilly is the leader in this niche. The company's GLP-1 medicines, including the diabetes treatment Mounjaro, as well as Zepbound and Foundayo, two weight-loss drugs, are posting strong sales. Eli Lilly has been growing its revenue and earnings much faster than similarly sized peers over the past two years, thanks to its dominance in this field.

LLY Revenue (Quarterly YoY Growth) data by YCharts

The company also looks likely to solidify its dominance, even as other companies seek to launch competing therapies. Eli Lilly has a deep pipeline in its core therapeutic area. The best part is that some of its products in development won't simply cannibalize its current portfolio but could actually expand the market. That's the feat Eli Lilly achieved with Foundayo, an oral weight-loss drug attracting mostly brand-new patients. The company's retatrutide, which is currently in phase 3 studies, could target people with high BMIs (Body Mass Indexes) for whom current weight loss options aren't aggressive enough.

Retatrutide has posted efficacy results that rival what we normally see with bariatric procedures.

Beyond Eli Lilly's diabetes and weight loss pipeline, the company has expanded its portfolio through acquisitions and should make significant progress in other areas over the next few years. Lastly, the company is also increasingly using artificial intelligence to help develop drugs, an initiative that may lead to lower expenses and higher profits over the long run. In short, Eli Lilly is a top healthcare stock to buy for investors looking to capitalize on the sector's expansion.

2. Intuitive Surgical

Intuitive Surgical is also a top player in a niche of the industry with significant growth prospects: Robotic-assisted surgery (RAS). The company's most important device, the da Vinci system, is the market leader. Thanks to its allowing surgeons to perform minimally invasive procedures that rely on small incisions and tiny, highly maneuverable instruments, it leads to better patient outcomes -- than with open procedures -- such as less bleeding, less scarring, and faster recovery times.

Yet, the RAS market remains underpenetrated, providing Intuitive Surgical with an attractive opportunity to expand its reach while posting strong sales and earnings growth as its procedure volume continues to move in the right direction. The company can also benefit as it launches newer, better versions of its famous device -- the da Vinci 5 hit the market in 2024 -- and as it earns more indications that expand its addressable market.

Intuitive Surgical's bread and butter is the sale of perishable instruments that work with the da Vinci system and need to be replaced regularly, which generates recurring, predictable revenue for the company. That's why procedure volume growth will be a powerful tailwind for Intuitive Surgical. True, the company has faced some headwinds lately, including steep tariffs that have impacted its financial results.

It could also encounter growing competition, as more healthcare leaders launch their own robotic systems. However, Intuitive Surgical has a solid lead on the rest of the field, having been on the market for over 20 years, and benefits from a wide moat thanks to high switching costs. The company's moat also grants it significant pricing power, which it may use to mitigate the impact of tariffs by raising prices. The bottom line is that Intuitive Surgical has a solid business and excellent prospects. The company is well-positioned to perform well over the long run despite recent obstacles.

Prosper Junior Bakiny has positions in Eli Lilly, Intuitive Surgical, Johnson & Johnson, and Novo Nordisk. The Motley Fool has positions in and recommends AbbVie, Eli Lilly, Intuitive Surgical, Merck, and Novo Nordisk. The Motley Fool recommends Johnson & Johnson and 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.