Power management chips maker Monolithic Power Systems (NASDAQ: MPWR) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 31% year on year to $664.6 million. On top of that, next quarter’s revenue guidance ($720 million at the midpoint) was surprisingly good and 5.7% above what analysts were expecting. Its non-GAAP profit of $4.21 per share was 2.2% above analysts’ consensus estimates.

Is now the time to buy MPWR? Find out in our full research report (it’s free).

StockStory’s Take

Monolithic Power Systems delivered a strong Q2, with the market responding positively to its robust performance. Management attributed the outperformance to diversified revenue growth across end markets, citing initial shipments of power solutions supporting new ASIC-based AI products and sequential gains in storage and compute. CEO Michael Hsing emphasized the company’s transformation beyond traditional chip supply, stating, “We continue our transformation from being a chip-only semiconductor supplier to a full-service silicon-based solutions provider.” The quarter also benefited from the company’s focus on expanding its technology portfolio and global supply chain resilience.

Looking ahead, Monolithic Power Systems’ guidance is underpinned by anticipated growth in enterprise data, a seasonal uplift in consumer markets, and the ongoing ramp of AI-related programs. CFO Bernie Blegen noted that the company is "cautiously optimistic about the outlook for the balance of the year," pointing to strong demand yet shorter visibility due to dynamic ordering patterns. Management expects new content opportunities in automotive and continued expansion of advanced power solutions to drive performance, while maintaining flexibility in response to evolving customer requirements.

Key Insights from Management’s Remarks

Management pointed to robust end market demand, successful expansion into AI power solutions, and a broadening customer base as primary contributors to quarterly growth and favorable guidance.

• AI and ASIC power ramp: The company began shipping power solutions for customers' new ASIC-based AI products, which management identified as a key growth vector both near- and long-term. CEO Michael Hsing highlighted multiple design wins with large enterprise data customers, noting, “MPS has appeared to be a winner,” as the company is now engaged with all major players in the space.
• Storage and compute momentum: Revenue from storage and compute grew sequentially as demand for memory and notebook power solutions remained strong. Management signaled caution for the segment in the coming quarters due to atypical seasonality after strong gains in Q1 and Q2, but emphasized there is no indication of weakening market position.
• Automotive content ramp: The automotive segment experienced a significant lift earlier in the year and is expected to accelerate again in the second half as new platforms with Western original equipment manufacturers (OEMs) come online. Tony Balow (VP Finance) pointed to ongoing opportunities in 48-volt and zonal architectures, which are expected to support long-term growth.
• Customer and geographic diversification: The company returned to a more balanced customer profile, reducing concentration risk. Management commented that customer diversification is being restored to historical norms, with no single customer expected to exceed mid-high single digits as a percentage of sales.
• Module and solutions shift: MPS continued its transition from a chip-only model to providing full-system silicon-based solutions, including power modules and motion-control products. Management disclosed that power modules outside enterprise data are projected to represent 10-15% of total revenue next year, supporting broader market relevance.

Drivers of Future Performance

Management expects future growth to be driven by enterprise data expansion, increased adoption of system solutions, and new automotive platform ramps, though some macro uncertainty and short lead times remain.

• Enterprise data and AI adoption: The ramp-up of AI-optimized ASIC platforms is expected to fuel enterprise data growth, with sequential improvement anticipated in Q3. Management highlighted the blurring of lines between traditional CPU and AI growth, suggesting a broad-based demand environment with significant design win activity.
• Automotive and industrial expansion: New automotive content opportunities and advancements in industrial motion-control solutions are seen as long-term growth drivers. Management pointed to increasing adoption of 48-volt architectures and ongoing relevance of power modules across multiple verticals, with Tony Balow noting these will "continue to be opportunity for us going forward."
• Cautious inventory and ordering patterns: While demand remains robust, management flagged potential risks from short lead times and limited backlog visibility, describing the ordering environment as atypical for a cyclical recovery. CFO Bernie Blegen stated that the company is "not necessarily building backlog that we have visibility out beyond 2 quarters," maintaining flexibility to adapt to changing market conditions.

Catalysts in Upcoming Quarters

In future quarters, our analysts will closely watch (1) the pace and breadth of adoption for AI-optimized power solutions in enterprise data centers, (2) the timing and impact of new automotive and industrial platform ramps, and (3) the company’s ability to maintain diversified customer and geographic exposure to mitigate demand fluctuations. The evolution of inventory and order visibility will also be a critical signpost for sustained growth.

Monolithic Power Systems currently trades at $838.81, up from $712.38 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

Stocks That Trumped Tariffs

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.