MPWR Raises 2026 Enterprise Data Growth Floor as AI Demand Surges

MPWR’s Enterprise Data Revenue Jumps 164.3%

Enterprise Data revenue reached $380.6 million in the second quarter, up 164.3% year over year and 44.8% sequentially. Its share of revenues increased from 32.7% in the first quarter.

Growth came from existing and new customers, higher module content, platform refreshes and central processing unit server demand. Management also said the segment does not have concentrated customers.

Monolithic Raises the 2026 Growth Floor to 130%

Management raised the 2026 Enterprise Data growth floor to 130% from 85% as channel inventory remained very low. Book-to-bill, which compares orders with shipments, stayed well above one, giving MPWR more than one quarter of order visibility.

The company expects new socket wins and current structural drivers to support Enterprise Data growth into 2027. Management cannot extend current order visibility through that year, leaving longer-term demand dependent on customer spending and product ramps.

Image Source: Zacks Investment Research

MPWR Broadens Its AI Content Beyond Core Power

Communications revenue rose 78.3% year over year to $131.5 million, helped by optical modules and switches. Power solutions for data processing units and network interface cards are also contributing across the data-center rack.

MPWR received initial orders for high-speed DDR5 memory components and began sampling high-voltage AC-to-DC products for 800-volt data-center architectures. Analog Devices, Inc. ADI is strengthening high-density AI power delivery through its planned Empower Semiconductor acquisition. Microchip Technology Incorporated MCHP has introduced silicon-carbide power modules for solid-state transformers in AI data centers.

Monolithic Expands Capacity for the Next Wave

MPWR extended its capacity goal significantly beyond $6 billion to support future growth and its shift toward more complete semiconductor-based solutions. Expansion includes wafer capacity and the more complex back-end assembly required for modules and systems.

The company is adding front-end and back-end partners while pursuing a geographically balanced supply chain. That flexibility matters as some customers request production outside China, although management has not finalized the eventual geographic mix.

MPWR’s AI Mix Brings New Execution Risk

Enterprise Data’s 38.8% revenue share increases MPWR’s sensitivity to AI and server investment cycles. Internal inventory climbed to $675.8 million from $619.2 million in the prior quarter, even as inventory days improved.

Margins remain another constraint. Second-quarter non-GAAP gross margin was 55.6%, near the low end of management’s model, while third-quarter guidance calls for 55.4%-56%. Faster capacity expansion could raise execution risk if demand changes before added supply is absorbed.

MPWR’s Bullish Signal Contrasts With Weak Style Scores

The bottom line is that MPWR has a favorable short-term earnings-revision signal, but its Style Scores do not provide the same support. The stock currently carries a Zacks Rank #1 (Strong Buy), which reflects trends in earnings estimate revisions over the next one to three months.

MPWR has a Value Score of F, Growth Score of D, Momentum Score of D and VGM Score of F. Zacks Style Scores complement the Rank, with A or B scores preferred alongside top-ranked stocks. The combination points to positive estimate momentum but weaker style characteristics for investors to weigh separately.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research