What Happened?

Shares of power management chips maker Monolithic Power Systems (NASDAQ: MPWR) jumped 5.1% in the afternoon session after the company reported fourth-quarter results that topped Wall Street estimates and provided an optimistic outlook for the upcoming quarter. 

The power management chipmaker posted quarterly revenue of $751.2 million, up 20.8% year-on-year, while its adjusted earnings per share of $4.79 also beat expectations. Investors were particularly encouraged by the company's revenue forecast for the first quarter of 2026 which, at a midpoint of $780 million, came in 5.7% above analyst consensus. The strong results and outlook overshadowed a material increase in inventory levels, signaling investor confidence in future demand.

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What Is The Market Telling Us

Monolithic Power Systems’s shares are very volatile and have had 28 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 9 days ago when the stock gained 5.7% on the news that a broad rally in the semiconductor sector lifted shares as industry bellwether ASML reported strong earnings and a positive outlook. 

ASML, a key supplier to chipmakers, posted strong 2025 results with €32.7 billion in total net sales and €9.6 billion in net income. The company also reported what were described as “blowout orders,” signaling that the market's demand for advanced chips remained robust. ASML also provided an upbeat sales forecast for 2026. This positive news from an industry giant created a tailwind for other chip-related stocks. Adding to the optimism, Monolithic Power's own management saw potential for significant growth, forecasting a 30% to 40% increase in enterprise data for 2026.

Monolithic Power Systems is up 30.2% since the beginning of the year, and at $1,219 per share, has set a new 52-week high. Investors who bought $1,000 worth of Monolithic Power Systems’s shares 5 years ago would now be looking at an investment worth $3,308.

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