Monolithic Power Systems (MPWR) has struggled lately, and the stock is now down 31% over the past month. After a poorly received October earnings report, MPWR fell nearly 15% on Monday alone, pressured by concerns surrounding its allocation to Nvidia's (NVDA) Blackwell GPUs after a report from Edgewater Research indicated that Nvidia had canceled up to half of MPWR's backlog due to performance issues.
This report sparked major concerns about Monolithic Power's business prospects, particularly in its Enterprise data segment, which was expected to leverage artificial intelligence (AI) advancements.
In response, management today filed an 8-K report that stated, in part, “the Company has no performance issues and remains in NVIDIA Corporation’s bill of materials for its next generation systems. The Company’s Q4-2024 guidance remains unchanged.”
Investors might view the current oversold status of MPWR shares as a buying opportunity, given the company's solid foundation and market leadership in semiconductor technologies. The stock is currently trading about 33% below its 52-week high - and the last time MPWR was this oversold and trading below its 200-day moving average, it was a solid buying opportunity.
That said, reliance on third-party manufacturing and market concentration in Asia present potential risks. Plus, even after the recent sell-off, MPWR stock isn’t exactly cheap, valued at a forward adjusted price/earnings ratio (P/E) of 45.98 and forward price/sales of 14.39.
Nevertheless, MPWR's long-term growth prospects and technological leadership remain promising. Monolithic Power maintains robust financial health, supported by a strong balance sheet and consistent revenue growth. The company's innovative power management solutions and strategic partnerships continue to bolster its competitive edge.
Analysts have a “moderate buy” consensus rating on MPWR stock, with the mean price target of $954.67 implying expected upside of 48% from current prices.
This article was generated with the support of AI and reviewed by an editor. On the date of publication, the editor had a position in: NVDA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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