What Happened?

Shares of power management chips maker Monolithic Power Systems (NASDAQ: MPWR) jumped 5.7% in the afternoon session after a broad rally in the semiconductor sector lifted shares as industry bellwether ASML reported strong earnings and a positive outlook. 

ASML, a key supplier to chipmakers, posted strong 2025 results with €32.7 billion in total net sales and €9.6 billion in net income. The company also reported what were described as “blowout orders,” signaling that the market's demand for advanced chips remained robust. ASML also provided an upbeat sales forecast for 2026. This positive news from an industry giant created a tailwind for other chip-related stocks. Adding to the optimism, Monolithic Power's own management saw potential for significant growth, forecasting a 30% to 40% increase in enterprise data for 2026.

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What Is The Market Telling Us

Monolithic Power Systems’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 13 days ago when the stock gained 5% on the news that Wells Fargo upgraded the stock's rating from "Equal-Weight" to "Overweight" and raised its price target. 

The bank's analyst, Joe Quatrochi, increased the target price on the shares from $1100 to $1125. The upgrade was based on improving sentiment in the chip sector, which was driven by the potential for inventory replenishment by customers. Wells Fargo also noted that the company faced easier year-over-year comparisons. This means its upcoming results would be measured against a relatively weaker period from the year before, which could make its growth look more impressive.

Monolithic Power Systems is up 24.4% since the beginning of the year, and at $1,165 per share, has set a new 52-week high. Investors who bought $1,000 worth of Monolithic Power Systems’s shares 5 years ago would now be looking at an investment worth $3,166.

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