Over the past three months, some of the biggest names in the semiconductor industry have stalled out. NVIDIA (NASDAQ: NVDA) is up just 1% over that time, Broadcom (NASDAQ: AVGO) is down 1%, and Advanced Micro Devices (NASDAQ: AMD) has fallen over 7%.
However, that’s not the case for the super-charged chip stock Monolithic Power Systems (NASDAQ: MPWR). The stock has delivered a 26% return over the past 3 months and a 69% return over the past 52 weeks.
Monolithic posted its latest financial results on Feb. 5, which vindicated the stock's huge rise.
After such a significant ascent, is there still a strong opportunity in MPWR shares going forward?
MPWR Gets a Lift After Rock-Solid Earnings Report
In Q4 2025, Monolithic posted revenue of $751 million, an increase of 21% from the prior year. This solidly exceeded estimates near $742 million, which called for growth of 19%. Adjusted earnings per share (EPS) rose by 17% to $4.79. This beat estimates of $4.74, which implied growth of 16%.
Monolithic’s full-year performance was very impressive. Revenue rose by more than 26%, the company’s fastest growth rate since 2022. Operating margin also rose 60 basis points to a very high 35.2%. Additionally, sales in all but one of the company’s six end markets grew by 25% or more. Enterprise data was the lone loser, with sales falling 2%. By Q4, every end market was growing sales by at least 15% year over year.
In 2025, three of these end markets each made up at least 20% of total revenue, showing the diversification in Monolithic’s customer base. Markets rewarded Monolithic after the Feb. 5 earnings release, with shares rising 6.4% the next day.
Monolithic Raises Data Center Forecasts, Sends 800 VDC Samples
Looking ahead, Monolithic expects revenue to grow by more than 22% based on the midpoint of its guidance in Q1 2026. This was much higher than forecasts, which projected Q1 growth of just 16%. Monolithic is seeing robust demand from its customer base, with the firm’s book-to-bill ratio coming in “well in excess of one” last quarter.
This is a very positive sign for future growth, as the company received more orders in the quarter than it had in sales. The firm’s backlog now extends to Q3 2026. The enterprise data segment, which houses data center sales, is particularly strong. Monolithic raised its 2026 sales growth estimates for this market from 30-40% to a floor of 50%.
Even further out, Monolithic has a huge opportunity ahead of it through 800-volt direct-current (VDC) data center architecture. This is an emerging data center power delivery and distribution system that NVIDIA is spearheading.
Monolithic says it is the first company to send product samples as it looks to compete for the 800 VDC business. However, revenue from this venture likely wouldn’t show up until the end of 2027 or beyond. Still, Monolithic’s update here is a positive, showing the firm’s technical readiness in competing for high-value deals.
Monolithic: Fantastic Executor, Premium Valuation
Overall, it's difficult to find things not to like about Monolithic Power Systems' business. However, there is one glaring issue: its valuation. At current levels, Monolithic’s share price implies very high free cash flow growth for many years to come.
Even with significant data center tailwinds and a diversified customer base, this is a demanding setup for the company. A slip-up in MPWR’s execution could deliver a significant hit to its stock, with investors pricing in such high expectations.
The MarketBeat consensus price target on Monolithic sits near $1,218, implying just 1% upside in shares. However, analysts issuing price targets after the company’s earnings report are more bullish. They average $1,309, suggesting that shares could rise around 8%. Rosenblatt Securities’ $1,000 updated target implies 17% downside, while KeyCorp’s $1,500 updated target implies 24% upside.
Despite the company’s valuation seemingly approaching a ceiling, Monolithic remains a very high-quality company with the potential to grow for decades. This comes as advancements in power regulation chips and systems are key to enabling technological progress across many parts of the economy.
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The article "Monolithic Power Systems Is Surging—Has Valuation Caught Up?" first appeared on MarketBeat.
