Intuitive Surgical Stock Just Fell Despite a 22% Revenue Jump. Here's What Investors Are Missing.

Shares of Intuitive Surgical (NASDAQ: ISRG) fell after the surgical robotics company reported earnings on Oct. 20. That drop came despite a 22% revenue jump. The real story that investors are missing is that sales of the da Vinci surgical robot aren't the main driver of the company's revenue. Here's what is.

There's room for more than one

The big concern about surgical robotics right now is that competition is heating up. Medtronic (NYSE: MDT) and Johnson & Johnson (NYSE: JNJ) have each entered the fray. Both are well-respected medical device makers, so they are likely to gain traction with devices that compete against Intuitive Surgical's da Vinci system. Investors appear to view this as a material threat to Intuitive Surgical's growth prospects.

Image source: Getty Images.

It is, but there's ample room for growth even with new entrants. Notably, Intuitive Surgical sold more da Vinci systems in the third quarter of 2026 than it did in the same quarter of 2025. So, despite new players, growth hasn't stopped. And, notably, the number of procedures using a da Vinci system rose by 15%, while the number of installed systems increased by "only" 12% year over year.

The fact that procedures are increasing faster than robot sales is important to understand, because it highlights the demand for robotic surgery. It also leans into one of Intuitive Surgical's largest strengths. The sale of robots accounts for roughly 25% of revenues, while the sale of instruments, accessories, and services makes up the rest of the top line. So while selling da Vinci systems is important, the real business driver is what amounts to parts and services.

Intuitive Surgical has a huge installed base

To be fair, Intuitive Surgical's stock price has recovered from the earnings-related drop, and then some. But that drop highlights an ongoing perception issue. While new competition will likely be a business headwind, Intuitive Surgical's already large installed base of over 12,000 systems has created an annuity-like cash flow machine to support the company's business. And while surgical robotics is fairly well-established as a healthcare offering, it is still nowhere near saturation.

So, as you look at Intuitive Surgical, you need to remember two key facts. First, the company has an incredibly strong foundation of recurring income from parts and services sales. And there's likely to be ample room for growth ahead, despite increasing competition, as surgical robots in general gain traction worldwide.

Reuben Gregg Brewer has positions in Medtronic. 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.