Should You Buy Monolithic Power Systems, Inc. (NASDAQ:MPWR) Now?

Monolithic Power Systems (NASDAQ:MPWR) is a well-established company with a relatively large price hike in the past couple of weeks. The stock's price-to-earnings ratio is below its peer average, indicating a lower price compared to the Semiconductor industry. However, the company is expected to deliver a highly negative earnings growth in the next few years, which may be a concern for investors looking for growth. Despite this, the stock is considered a bargain according to our price multiple model.

Monolithic Power Systems (MPWR) has reported robust financial results for the second quarter of 2025, with revenue surging to $664.6 million, a 31.0% year-over-year (YoY) increase. This performance exceeded analyst expectations, contributing to a significant stock price rally. The company's Q3 2025 guidance, projecting revenue between $710 million and $730 million, further bolstered investor confidence. This strong financial performance is driven by the increasing demand for power solutions in AI data centers, where Monolithic Power's integrated and efficient power modules address the energy bottleneck. The stock price surged over 10% following the earnings announcement [1].

The company's impressive financial performance is directly tied to the growing demand for power solutions in AI data centers. Modern AI accelerators, such as GPUs and custom ASICs, are highly power-hungry, generating significant heat and straining the power delivery infrastructure of even the most advanced facilities. Monolithic Power Systems has established a key advantage by providing highly integrated and efficient power modules that solve this energy bottleneck. The company's proprietary technology allows for higher power density, meaning more power can be delivered cleanly and efficiently in a smaller physical space. These solutions are mission-critical for data center operators trying to maximize computing power without overhauling their entire infrastructure, making Monolithic Power Systems a key enabler of the entire AI ecosystem [2].

Following the earnings release, Wall Street analysts were quick to validate the market's enthusiastic reaction. The strong results and optimistic guidance prompted a wave of positive revisions, reinforcing the company's bullish thesis. Firms including Citigroup, Stifel Nicolaus, and KeyCorp all raised their price targets on Monolithic Power Systems' shares, with many reiterating Buy or Outperform ratings. This chorus of approval from financial experts signals a growing belief that the company's strategic execution is not only on point but accelerating, driven by the durable demand from the AI sector. The company's ownership structure, with over 93% of its stock held by institutional investors, further indicates a deep and widespread conviction in the company's long-term strategy and execution [1].

Monolithic Power Systems' second-quarter performance was more than a strong earnings report; it confirmed a strategic success. The powerful combination of a definitive financial beat, firm forward guidance, and a direct link to the explosive growth in AI infrastructure provides a clear picture of a company firing on all cylinders. The market's decisive rally acknowledged this fundamental reality. While high growth expectations are often priced into technology stocks, Monolithic Power delivered the data to back them up [1].

The results signal a strategic inflection point where Monolithic Power is cementing its role as an essential supplier for the AI revolution, effectively turning the immense energy needs of the buildout into robust and accelerating financial growth. Despite the stock's recent price hike and its below-average price-to-earnings ratio compared to its peers, the company's strong fundamentals and growth prospects suggest it remains a bargain according to our price multiple model [3].

References:
[1] https://www.ainvest.com/news/monolithic-power-systems-earnings-guidance-ignite-stock-rally-ai-infrastructure-demand-2508/
[2] https://finance.yahoo.com/news/heres-why-monolithic-power-mpwr-134503799.html
[3] https://www.marketbeat.com/originals/why-monolithic-powers-earnings-and-guidance-ignited-a-rally/