Last Update 15 Dec 25

MPWR: AI And Data Center Demand Will Drive Multiyear Earnings Expansion

Analysts have modestly raised their price targets on Monolithic Power Systems, with new forecasts clustering in the $1,050 to $1,300 range. They cite stronger than expected DC and AI driven demand, diversified Enterprise Data and industrial growth, and a clearer path to accelerating earnings over the next several years.

Analyst Commentary

Bullish analysts highlight Monolithic Power Systems as a high conviction beneficiary of structural DC and AI demand, with diversified growth drivers across enterprise data, industrial, communications, and automotive markets. Recent estimate and price target increases reflect confidence in the company’s ability to compound earnings and sustain premium valuation multiples.

Several firms point to a clearer multiyear earnings trajectory, with some models now embedding a conservative path toward meaningfully higher earnings per share by 2027. This visibility, combined with strong execution on product ramps and share gains at key AI customers, underpins the latest round of target hikes into the low to mid $1,000s.

While the tone of recent research is overwhelmingly positive, analysts continue to scrutinize assumptions around enterprise data normalization, customer concentration in leading AI platforms, and the sustainability of current industrial and communications strength. These factors frame the debate on how far valuation can stretch relative to the long term growth outlook.

Bullish Takeaways

Bullish analysts see accelerating DC and AI demand, combined with share gains in next generation AI platforms, supporting above market revenue growth and justifying higher price targets.
Enterprise data and industrial segments are viewed as diversified growth engines, with multiple new customer and product ramps providing a multiyear runway and reducing reliance on any single end market.
Upbeat commentary on high speed optical modules, automotive content expansion, and compute and storage strength suggests broad based momentum that can support upward earnings revisions.
Several models embed what are described as conservative earnings paths, yet still point to substantial EPS expansion by 2027, giving room for further upside if execution remains strong.

Bearish Takeaways

Bearish analysts caution that the stock’s valuation is already rich versus peers, leaving less margin for error if AI or enterprise data growth moderates.
Expectations for robust 2026 enterprise data growth and continued share gains at leading AI customers increase sensitivity to any delays in customer ramps or changes in platform roadmaps.
Some forecasts still assume a modest decline in enterprise exposure in 2025, signaling risk around near term digestion even as the longer term outlook improves.
With the story now widely recognized and price targets clustered well above prior levels, any execution slip or macro driven slowdown could prompt a sharper derating from current multiples.

What's in the News

Truist raised its price target on Monolithic Power Systems to $1,163 from $922 and reiterated a Buy rating after solid, diversified results and stronger DC and AI demand, reinforcing the company’s premium growth narrative (Truist research note).
The Board adopted Amended and Restated Bylaws that lower the stock ownership threshold required to call a special shareholder meeting to 25 percent from 30 percent, a governance change made after weighing a 10 percent shareholder proposal and feedback from major investors (company filing).
Monolithic Power Systems issued fourth quarter 2025 guidance, projecting revenue between $730 million and $750 million, indicating management’s confidence in near term demand trends in DC, AI, and diversified end markets (company guidance).
The company reported completing the repurchase of 5,900 shares for $4.74 million under its February 6, 2025 buyback authorization, reflecting ongoing capital returns at a modest scale relative to market capitalization (company disclosure).
Reed Semiconductor Corp. filed a patent infringement and business interference lawsuit against Monolithic Power Systems in the Western District of Texas, creating additional legal overhang for the stock as both parties pursue multiple ongoing IP related cases (court filing).

Valuation Changes

Fair Value: Unchanged at approximately $1,181 per share, indicating no revision to the intrinsic value estimate.
Discount Rate: Risen slightly from about 10.37 percent to 10.42 percent, reflecting a modestly higher required return.
Revenue Growth: Effectively unchanged at roughly 16.45 percent, signaling stable top line growth assumptions.
Net Profit Margin: Stable at about 25.15 percent, with no material adjustment to long term profitability expectations.
Future P/E: Increased marginally from approximately 72.13x to 72.22x, indicating a slightly higher forward valuation multiple.

AI and automotive growth opportunities drive optimism, but market saturation and high expectations could limit future revenue acceleration.
Investments in innovation and manufacturing are positive, yet rising costs and supply chain risks may pressure profitability and stability.
Expansion into AI data centers, automotive electrification, and full-service solutions drives diversified growth, margin improvement, and resilience against single-market risks.

Catalysts

About Monolithic Power Systems

Designs, develops, markets, and sells semiconductor-based power electronics solutions for the storage and computing, automotive, enterprise data, consumer, communications, and industrial markets in the United States, China, Taiwan, South Korea, Europe, Southeast Asia, Japan, and internationally.What are the underlying business or industry changes driving this perspective?

Investor optimism appears anchored in MPS's exposure to accelerating AI adoption in data centers (including design wins with major ASIC-based AI platforms and anticipated industry-wide server transitions to 48V/800V architectures), which could drive sustained revenue outperformance, even as end-market growth normalizes and competition increases.
Expectations for long-term automotive segment growth, driven by secular shifts toward EVs, zonal and 48V/800V in-car architectures, and increased semiconductor content per vehicle, are supporting high valuation multiples; however, these trends may already be fully priced in, leading to risk of eventual slower revenue growth as the rollout curve flattens.
The company's significant investments in manufacturing, technology innovation, and expansion into new markets are assumed by the market to translate into continuous margin expansion and earnings leverage, but increasing R&D and compliance costs, as well as rising environmental/supply chain requirements, could erode net margins over time.
Assumptions of a structurally larger total addressable market are driven by the rapid proliferation of connected/IoT devices and edge computing; if industry saturation or macro slowdowns materialize, expectations of consistently robust top-line growth and favorable earnings revisions may prove optimistic.
MPS's narrative of diversified customer exposure and supply chain resilience (including geographic diversification of capacity) underpins investor confidence in stable long-term growth, but short ordering cycles, periodic inventory corrections, and potential customer concentration risk may introduce volatility to both revenues and near-term earnings not reflected in current valuations.

Monolithic Power Systems Earnings and Revenue Growth

Monolithic Power Systems Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Monolithic Power Systems's revenue will grow by 15.5% annually over the next 3 years.
Analysts assume that profit margins will shrink from 73.2% today to 26.2% in 3 years time.
Analysts expect earnings to reach $1.0 billion (and earnings per share of $21.22) by about September 2028, down from $1.9 billion today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 49.2x on those 2028 earnings, up from 22.1x today. This future PE is greater than the current PE for the US Semiconductor industry at 33.5x.
Analysts expect the number of shares outstanding to decline by 1.82% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.96%, as per the Simply Wall St company report.

Monolithic Power Systems Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company has demonstrated broad-based, diversified revenue growth across all of its end markets-including enterprise data, auto, storage, compute, and communications-which suggests resilience against declines in any single segment and improves the visibility and stability of long-term revenues.
Monolithic Power Systems is attaining major design wins with multiple large, blue-chip customers in the rapidly growing AI and ASIC data center market, and is benefiting from secular multi-year expansion in AI, machine learning, and power-hungry architectures-a structural tailwind for power management IC suppliers that could support robust, sustained top-line growth.
There is sustained strong momentum in the automotive segment, with content per vehicle rising due to adoption of 48-volt and zonal architectures, and MPS set to benefit further as electrification and digitalization accelerate across the auto industry, which can provide a reliable and high-growth revenue stream for the company over several years.
The company's transformation from a chip-only semiconductor supplier to a full-service silicon-based solutions provider, and its focus on vertical, module-based, and system-level solutions, allow it to capture higher value, increase customer stickiness, and drive gross and operating margin expansion critical for long-term earnings growth.
MPS has expanded its manufacturing and supply chain capacity to $4 billion in annual revenue, with significant diversification outside China, positioning it to gain share, secure supply for customers in a geopolitically sensitive environment, and take advantage of rising semiconductor content in end devices-all of which may support higher revenues and margins in future years.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $843.231 for Monolithic Power Systems based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $940.0, and the most bearish reporting a price target of just $750.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.9 billion, earnings will come to $1.0 billion, and it would be trading on a PE ratio of 49.2x, assuming you use a discount rate of 10.0%.
Given the current share price of $857.87, the analyst price target of $843.23 is 1.7% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

MPWR: Enterprise Data Segment Will Drive Share Gains Into 2026