What Happened?

Shares of power management chips maker Monolithic Power Systems (NASDAQ: MPWR) fell 11.7% in the afternoon session after the company reported third quarter earnings which failed to impress Wall Street. 

The power management chipmaker posted revenue of $737.2 million, up 18.9% year-on-year, and an adjusted EPS of $4.73, both surpassing analysts' estimates. Additionally, the company's revenue guidance for the fourth quarter was set at $740 million, also ahead of consensus forecasts. The report highlighted other positive operational metrics, including a material improvement in inventory levels. The company's commentary noted that its gross margins remained strong, suggesting stable pricing power. While the stock initially traded up modestly after the earnings release, the subsequent sharp decline indicated that investors may be focusing on broader market concerns or factors not detailed in the otherwise solid quarterly report.

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What Is The Market Telling Us

Monolithic Power Systems’s shares are very volatile and have had 29 moves greater than 5% over the last year. But moves this big are rare even for Monolithic Power Systems and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 8 days ago when the stock gained 6.8% on the news that KeyBanc raised its price target on the stock, citing expectations the company would regain significant market share with NVIDIA's next-generation GPU platform. The investment firm increased its target to $1,250 from $1,050 while keeping an 'Overweight' rating. This decision was based on supply chain research suggesting Monolithic Power was positioned to capture about 70% of the market for components on NVIDIA's new Vera Rubin platform. The positive outlook from the analyst reflected strong confidence in the semiconductor company's future performance.

Monolithic Power Systems is up 64% since the beginning of the year, but at $974.70 per share, it is still trading 11.8% below its 52-week high of $1,105 from October 2025. Investors who bought $1,000 worth of Monolithic Power Systems’s shares 5 years ago would now be looking at an investment worth $3,092.

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