Monolithic Power Systems Stock Surges on AI Demand and Robust Earnings

Shares of semiconductor company Monolithic Power Systems are trading near record highs, having appreciated more than 60% since the start of the year. This impressive rally is fueled by a combination of powerful quarterly results and escalating demand for components that enable artificial intelligence. Investors are now weighing the sustainability of this upward trajectory.

Several key factors underpin the company's current strength. Foremost among them is the surging demand for AI, with Monolithic Power's engagement in AI-driven data centers serving as a primary growth engine. Furthermore, the business benefits from a broad market presence, demonstrating robust performance across diverse sectors including automotive, communications, and industrial applications, which provides valuable diversification. Continuous product innovation, marked by new design wins in critical areas like Advanced Driver-Assistance Systems (ADAS) and robotics, helps secure its future pipeline. The company's strategic evolution from a pure-play chipmaker to a provider of complete silicon-based solutions solidifies its foundation in high-growth markets.

Q3 2025 Earnings Exceed Expectations

The company's most recent financial report, for the third quarter of 2025, delivered a positive surprise. Revenue climbed 18.9% year-over-year to reach $737.2 million, surpassing consensus estimates. Adjusted earnings per share came in at $4.73.

Performance was particularly strong in the Enterprise Data segment, where revenue hit $191.5 million—a sequential increase of 33%. Analysts attribute this significant jump primarily to sales of power management solutions for AI applications. The automotive business also posted substantial growth, expanding 36.1% compared to the same period last year.

Market Response and Share Performance

Despite these solid fundamentals, the stock experienced initial volatility. Following the earnings release on October 30, shares dipped between 3% and 7% in after-hours trading, a reaction that highlights the elevated expectations already baked into the stock price. However, the underlying financial strength and an optimistic outlook from management quickly restored investor confidence.

Should investors sell immediately? Or is it worth buying Monolithic Power?

The equity has since resumed its upward climb. As of December 5, shares advanced 1.11% to $963.28. The year-to-date performance remains remarkable, with gains exceeding 62%.

Analyst Sentiment and Forward Guidance

Market experts largely share the positive outlook. The consensus rating among analysts sits at "Moderate Buy" or equivalent. The average price target from 14 covering analysts is approximately $1,047.27, implying a potential upside of nearly 9% from current levels. Some strategists are even more bullish, citing targets as high as $1,300.

Management's own guidance for the ongoing fourth quarter reflects confidence. The company anticipates revenue in the range of $730 million to $750 million. The midpoint of this forecast is above current analyst estimates.

The next key test for the stock will be the Q4 2025 results, expected in late January 2026.