Monolithic Power Systems, Inc. MPWR is entering a higher earnings base as artificial intelligence (AI) and server demand lifts its data-center power business. Second-quarter 2026 revenues rose 47.6% year over year, while non-GAAP earnings increased 54.4% to $6.50 per share.
The question for investors is whether rapid growth, rising estimates and a broader product opportunity can offset a valuation that remains well above major benchmarks.
MPWR’s AI Growth Is Rewriting the Earnings Base
Enterprise Data revenue jumped 164.3% year over year to $380.6 million and represented 38.8% of second-quarter revenues. Existing and new customer ramps, greater module content, platform refreshes and central processing unit server demand supported the increase.
Management raised its 2026 Enterprise Data growth floor to 130% from 85%. Communications revenue also advanced 78.3%, reflecting higher sales of power solutions for optical modules and switches.
Image Source: Zacks Investment Research
Monolithic’s Estimate Revisions Keep Moving Higher
The Zacks Consensus Estimate calls for 2026 revenues of $4.084 billion and earnings of $27.11 per share. For 2027, the consensus stands at $5.156 billion in revenues and $34.73 per share in earnings.
The current-year earnings estimate has moved 16% higher over the past four weeks. Consensus earnings for 2026 also stand well above the $17.77 per share reported for 2025, with another increase projected for 2027.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
MPWR’s Premium Multiple Raises the Bar
MPWR trades at 44.1X forward 12-month earnings, compared with 26.9X for its sub-industry, 21.3X for the broader technology sector and 20.7X for the S&P 500.
The current multiple is below MPWR’s five-year median of 55.8X but remains well above outside benchmarks. That premium places more emphasis on continued earnings expansion as investors assess the stock.
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Monolithic Faces Margin and Data Center Risks
Non-GAAP gross margin was 55.6% in the second quarter and remains near the low end of management’s model. Third-quarter guidance of 55.4%-56% points to limited near-term margin expansion, while order visibility does not extend through 2027.
Enterprise Data’s 38.8% revenue share also increases exposure to AI and server spending cycles. Analog Devices, Inc. ADI is also targeting AI data-center power delivery with analog and mixed-signal solutions. Microchip Technology Incorporated MCHP competes across analog, power management, timing and memory products used in data-center applications.
MPWR’s Balance Sheet Supports the Expansion
Cash, cash equivalents and short-term investments totaled $1.41 billion at June 30, 2026, while second-quarter operating cash flow was $227.9 million. That liquidity supports product development and capacity expansion.
MPWR has extended its capacity goal significantly beyond $6 billion. The company is expanding wafer supply and more complex module and system assembly while diversifying its global supply chain.
MPWR’s Bullish Signal Meets Weak Style Scores
MPWR’s earnings trajectory remains favorable, but the valuation makes the investment case less forgiving. The stock currently carries a Zacks Rank #1 (Strong Buy), reflecting favorable short-term earnings-estimate trends.
The Style Scores are less supportive. MPWR has a Value Score of F, Growth Score of D, Momentum Score of D and VGM Score of F. The combination is mixed rather than decisive because the Zacks Rank favors near-term estimate revisions, while the weak Style Scores do not provide the A or B confirmation that can strengthen a top-ranked stock selection.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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