Monolithic Power Systems (MPWR) presents a particularly compelling investment opportunity. Not only is it an Nvidia AI megatrend beneficiary (enabling energy-efficient semiconductor technologies), but it’s an enormously profitable (81% net margin), strong-balance sheet, dividend-growth powerhouse that is currently trading at an attractive price. In this report, I review the business, market opportunity, growth, valuation, dividend and risks, and then conclude with my strong opinion on who may want to consider investing, and how.
About the Business
Monolithic Power designs integrated circuits (IC) to manage power for electronics/semiconductors (such as those used for cloud computing via data centers, Artificial Intelligence (“AI”) and automobile infotainment systems). Its mission is “to reduce energy and material consumption to improve all aspects of quality of life.”
Importantly, MPWR uses a “fabless” business model, whereby manufacturing is outsourced, thereby providing flexibility and cost efficiency (and helping it navigate the current “tariff environment” more efficiently than others, more on this later).