Monolithics Tension Field: Growth Meets Disappointing Forecasts

Monolithic Power Systems surprised the markets with strong revenue growth in the third quarter, exceeding analysts' expectations. Revenue rose an impressive 30.6% to $620.1 million, while earnings per share increased by 31.8% to $4.08. Despite these positive figures, the outlook forecast for the fourth quarter caused disappointment, as it suggests a potential revenue decline. Expectations for Monolithic were high, especially since the stock had nearly doubled over the past year and was trading at a significant multiple of past and future earnings. A delay in Nvidia Blackwell chips is seen as a possible reason for the subdued outlook. Market observers warn that the company is under increasing pressure from competition in Nvidia systems. Wall Street analyst Hans Mosesmann of Rosenblatt downgraded the stock from "Buy" to "Neutral" due to these challenges. He notes that Monolithic could lose market share to competitors like Infineon and Renesas in the future. Nevertheless, Monolithic still possesses promising technology in power solutions for growth markets such as data centers and electric vehicles. Now that the stock has fallen significantly, it could be of interest to investors who believe in its long-term potential.