Is MPWR a good stock to buy? We came across a bullish thesis on Monolithic Power Systems, Inc. on Contrarian Indicator's Substack by Cameron Fen. In this article, we will summarize the bulls' thesis on MPWR. Monolithic Power Systems, Inc.'s share was trading at $ 1,328.80 as of July 20th. MPWR's trailing and forward P/E were 93.92 and 54.05 respectively according to Yahoo Finance.
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Monolithic Power Systems, Inc. provides semiconductor-based power electronics solutions. Its fastest-growing customer base right now is AI data centers, and that's central to understanding the stock. AI servers use far more power than regular servers, and that power has to be delivered in more precise, complex ways than before, which is exactly what MPWR specializes in. First quarter 2026 revenue rose 26.1% year over year to a record $804.2 million, while adjusted EPS increased 26.2% to $5.10 — solid, but not spectacular for a stock trading at about 54 times next year's earnings, versus roughly 26 times for Analog Devices (NASDAQ:ADI) and 38 times for Texas Instruments (NASDAQ:TXN). The gap suggests that investors aren't paying for this year's growth, they're betting on several more years of it.
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The bullish case rests on AI infrastructure play with the idea that AI servers are only going to need more power management over time, not less. Each new generation of AI chips draws more electricity and needs more sophisticated circuitry to deliver it cleanly, so MPWR can grow two ways at once — more AI servers get built industry-wide, and each server needs more MPWR components than the last generation did. The evidence so far backs this up: MPWR's "Enterprise Data" segment, its AI server business, grew 97.7% year-over-year and now drives nearly 80% of the company's total revenue growth.
Management just raised its stated manufacturing capacity target from 4 billion to 6 billion units, essentially signaling that it expects demand large enough to need that much capacity. If cloud companies keep building bigger AI clusters and replacing older servers, bulls see multiple years of runway ahead, not just one good quarter. If that plays out, MPWR's earnings a few years from now should be much higher than today's— which is why investors are willing to pay 54 times next year's earnings. In addition to this, the recent dismissal of the Bel Power Solutions lawsuit eliminates a key legal overhang, which reinforces the broader investment case.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
