Monolithic Power Beats Q2 Earnings Estimates on Enterprise Data Growth

Profitability Expands

GAAP net income climbed 90.6% to $257.3 million, or $5.22 per share, from $135.0 million, or $2.81 per share, a year earlier. Non-GAAP net income advanced 58.3% to $320.1 million. GAAP operating income rose to $303.9 million from $164.8 million.

Non-GAAP gross margin was 55.6%, up 10 basis points (bps) year over year. Non-GAAP operating expenses increased 29.1% to $177.6 million, but strong revenue growth lifted the non-GAAP operating margin 270 bps to 37.5%.

End Markets Advance

Enterprise Data revenues reached $380.6 million and represented 38.8% of total sales. Growth reflected higher demand for power management solutions serving AI and server applications, with existing customers, new customers, higher module content and platform refreshes supporting the increase.

Storage and Computing sales rose 2.3% to $199.8 million. Automotive revenues grew 8.2% to $157.1 million, aided by higher sales of infotainment and advanced driver-assistance system power solutions.

Communications Momentum Accelerates

Communications revenues jumped 78.3% to $131.5 million. Optical modules remained the larger contributor, while switches, data processing units and network interface cards also supported growth.

Industrial sales increased 17.3% to $54.8 million. Consumer revenues declined 4.8% to $56.8 million, making it the only end market to contract year over year, although all six end markets improved sequentially.

MPWR Broadens Product Reach

The company extended its capacity target significantly beyond $6 billion to support future growth and its transition from a chip supplier to a full solutions provider. Expansion covers both wafer supply and the more complex back-end assembly needed for modules and systems.

The broader supply plan is designed to remain geographically balanced and adapt to customer requirements. Monolithic Power also received initial orders for high-speed DDR5 memory components and began sampling high-voltage AC-to-DC products for 800-volt data center architectures. The DDR5 effort is expected to expand the company's served market into next year.

Enterprise Data Growth Floor Raised

Management increased its 2026 Enterprise Data growth floor to 130% from 85%. Channel inventory remained very low, and book-to-bill was again well above one, providing more than one quarter of visibility.

CPU server power remained a growth driver, with the company broadly positioned across x86 and ARM platforms. Management also sees further communications opportunities from both market expansion and additional share gains in optical and switching applications.

Liquidity Remains Solid

Cash, cash equivalents and short-term investments totaled $1.41 billion at quarter-end, up from $1.37 billion at the end of the first quarter. Operating cash flow was $227.9 million, down from $250.3 million in the preceding quarter.

Inventories rose to $675.8 million from $619.2 million, but days of inventory based on current-quarter revenue declined to 140 from 157. The board authorized an additional $500 million for share repurchases, bringing the current authorization to $1 billion.

Outlook

For the third quarter of 2026, the company expects revenues of $1.14-$1.16 billion. Non-GAAP gross margin is projected between 55.4% and 56%, while non-GAAP operating expenses are expected in the range of $201.2-$205.2 million.

Zacks Rank

Monolithic Power currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Arista Networks Inc. ANET is scheduled to release second-quarter 2026 earnings on Aug. 4. The Zacks Consensus Estimate for earnings is pegged at 89 cents per share, suggesting a growth of 21.9% from the year-ago reported figure.

Arista has a long-term earnings growth expectation of 19.9%. Arista delivered an average earnings surprise of 8.3% in the last four reported quarters.

Akamai Technologies, Inc. AKAM is slated to release second-quarter 2026 earnings on Aug. 6. The Zacks Consensus Estimate for earnings is pegged at $1.58 per share, indicating an 8.7% decline from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 8.1%. Akamai delivered an average earnings surprise of 7.5% in the last four reported quarters.

Pinterest, Inc. PINS is set to release second-quarter 2026 earnings on Aug. 4. The Zacks Consensus Estimate for earnings is pegged at 36 cents per share, implying a rise of 9.1% from the year-ago reported figure.

Pinterest has a long-term earnings growth expectation of 27%. Pinterest delivered an average negative earnings surprise of 4.1% in the last four reported quarters.

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