Investors looking to benefit from the exciting artificial intelligence (AI) market are likely to turn to the tech sector first. It's an understandable strategy. That's where many, if not most, of the prominent AI leaders operate. However, there are exciting companies in other industries that are quietly incorporating AI into their businesses and could eventually become leaders.
One such corporation in the healthcare industry is Intuitive Surgical (NASDAQ: ISRG). Let's discuss the robotic-assisted surgery (RAS) leader's moves in AI and what they could mean for investors.
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Intuitive Surgical is an innovator
Intuitive Surgical's best known device, the da Vinci system, was the first RAS machine to earn clearance from the U.S. Food and Drug Administration (FDA) in the year 2000. Since then, the healthcare leader has introduced several more iterations of its crown jewel.
In March, the company earned clearance for the fifth generation of the da Vinci system. Intuitive Surgical's newest device introduces several cutting-edge features, including Force Feedback technology, which allows physicians to better gauge how much pressure they are applying to patients' body tissues during a procedure, leading to less trauma and, potentially, faster recovery times.
The da Vinci V, armed with 10,000 times the computing power of its predecessor, is ready for plenty of upgrades. The Force Feedback technology will help generate a stream of data on the amount of force surgeons use on tissue during procedures. According to Intuitive Surgical, the feature could, eventually, integrate AI-supported analytical insights to improve patient outcomes. This may not be a reality yet, but there are several other ways in which Intuitive Surgical is already using AI. Let's consider three.
First, it has integrated the technology in some instruments, including staplers that use AI to better monitor tissue connections. Second, Intuitive Surgical's SimNow, a simulator that helps coach physicians on the da Vinci system, uses AI to simulate and predict what happens during actual surgeries, providing valuable insights to physicians in training. Third, Intuitive Surgical offers consulting services, some of which integrate AI. For instance, the company helps hospitals optimize operating room scheduling.
As the AI field progresses, Intuitive Surgical will undoubtedly continue to integrate the technology into its business.
A long runway for growth
Intuitive Surgical's work in AI may not be impacting its financial results much yet. That might take a while. In the meantime, the company continues to perform well. Intuitive Surgical's da Vinci 5 is already a hit. The device's adoption has been more rapid than analysts anticipated. In the third quarter, 110 of the 379 da Vinci systems the company placed were of the latest model. It has already been used to perform 12,000 procedures. Intuitive Surgical's revenue was $2.04 billion, 17% higher than the year-ago period.
The company's adjusted earnings per share (EPS) of $1.84 were up 26% year over year. Other important metrics moved in the right direction, including the company's total procedure volume, which increased 18% compared to 2023's Q3.
Intuitive Surgical's da Vinci 5 helps strengthen its position in the RAS market, which has significant whitespace. Not only will the demand for the many kinds of procedures it offers increase over the long run -- a consequence of the world's aging population -- but right now, the industry is underpenetrated. As of 2023, less than 5% of eligible procedures were performed robotically.
The company's work in AI could become more critical in the future, but the company's long-term prospects look strong with or without that. It is an excellent healthcare stock to buy and hold.
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Prosper Junior Bakiny has positions in Intuitive Surgical. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
