Monolithic Power Systems (MPWR) just picked up another vote of confidence. GF Securities recently initiated coverage of the stock with a "Buy" rating and a $1,706 price target, which is well above where the shares trade today. The reason comes down to one shift that keeps getting bigger.
AI chips need power, and Monolithic makes the parts that deliver it. Basically, every new generation of AI chip, from Nvidia's (NVDA) older models to its upcoming ones, draws far more electricity than the last. That power has to be delivered cleanly and precisely, right next to the chip, or performance suffers.
Monolithic designs those power components. In other words, as AI chips get hungrier, each one needs more of Monolithic's parts, at a higher value per chip. The company essentially sells more with every step up in AI computing power.
This isn't just a forecast, since it's already showing up in the results. Monolithic reported record revenue of $981 million last quarter, up 48% from a year earlier. The standout was its enterprise data business, the segment tied to AI and data center chips, which jumped 45% sequentially.
Demand was strong enough that management raised its full-year growth target for that segment from 85% to a staggering 130%. Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. The company is also spreading its bets.
Beyond AI, it's winning new business in the automotive sector, communications equipment, and pushing into robotics. On the earnings call, CEO Michael Hsing described the shift that the company is going through. He said Monolithic is moving from just selling chips to providing complete power solutions and called it "the highest power density company in the world." GF Securities isn't alone in its optimism.
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