Intuitive Surgical Stock Is Having Its Worst Year Since 2008. What's Behind the Sell-Off?

Intuitive Surgical (NASDAQ:ISRG) is a leading company in the robotic-assisted surgical space. Its da Vinci machines are widely used, and surgeons have performed millions of procedures with them. Intuitive has significant growth potential, as it could help revolutionize the healthcare industry.

This year, however, the healthcare stock has been nosediving. It's down around 30% thus far in 2026, and if that doesn't improve, it'll be its worst performance since 2008.

What's wrong with Intuitive Surgical stock, and is it heading even lower, or could now be an opportune time to load up on this growth stock?

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Intuitive's recent numbers didn't do enough to give investors confidence in the business

In July, Intuitive reported its second-quarter earnings, covering the period through to the end of June. While the healthcare business posted double-digit growth, investors appeared unimpressed by the guidance.

While worldwide procedure growth in Q2 was solid at 16% and revenue was up 19%, investors may have been taken aback by the guidance: for the full year, the company is projecting da Vinci procedure growth within the range of 13.5% to 15.5%.

This is particularly concerning, as increased competition could erode Intuitive's market share in the future. Healthcare giant Johnson & Johnson recently obtained clearance from regulators for its Ottava robotic surgical system to be used in various soft tissue surgeries. Last year, medical device company Medtronic also obtained clearance for its Hugo robotic-assisted surgery system.

While Intuitive has a massive head start, news of greater competition ahead and the business reporting underwhelming growth may have sparked significant concerns for Intuitive's investors, especially as this isn't a cheap stock to own.

A high valuation may put more downward pressure on Intuitive's stock

The big problem with Intuitive's stock in recent years has been its incredibly high valuation, with it not uncommon to see the stock trade at around 80 times its trailing earnings. When a stock's valuation is that high, expectations will also be inflated. And if a company doesn't meet them, it can raise questions about whether the premium is justified, and investors may be thinking twice about that right now with Intuitive's stock.

Unfortunately, even with the stock falling sharply this year, it may not be all that cheap. It's trading at 45 times its trailing earnings, and on a forward basis, based on how profitable analysts expect the business to be in the year ahead, it's trading at a multiple of 36. By comparison, the average stock in the S&P 500 trades at 26 times its trailing earnings, and 21 times its expected future profits.

Intuitive, still trading at a premium, may continue to come under pressure in the coming weeks and months.

Is Intuitive's stock worth buying for the long haul?

This year, Intuitive's stock is underperforming the market by a wide margin, whereas it has typically been a market-beating stock in the past. The sell-off this year is even worse than the 26% decline it experienced in 2022 when the market crashed. If it stays around 30%, it'll be the worst single-year performance for Intuitive since 2008. That year, it crashed by nearly 61%.

The good news for investors, however, is that the robotic-assisted surgical market offers tremendous opportunities, and Intuitive isn't running out of room to grow anytime soon, even with increased competition. It may, however, require patience from investors, as the stock's valuation and modest growth could make it difficult for it to recover from the current headwinds.

Intuitive's stock was overvalued for a long time, and a correction was arguably long overdue. For investors willing to remain invested and hang on for the very long haul (i.e., more than just a few years), Intuitive may be a good buy right now.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuitive Surgical and Medtronic. 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.