5 Insightful Analyst Questions From Monolithic Power Systems's Q3 Earnings Call

Monolithic Power Systems delivered third-quarter results that exceeded Wall Street's expectations, yet the market reacted negatively, reflecting underlying concerns about sustainability and visibility. Management attributed the strong revenue growth to its diversified market strategy, with CEO Michael Hsing highlighting new automotive customer wins and expansion in robotics. The company’s transformation from a chip supplier to a solutions provider was a prominent theme, supported by design wins in advanced driver-assistance systems (ADAS) and battery management for robotics platforms. However, executives flagged challenges stemming from short order cycles and ongoing pricing pressures. These results highlight both the strengths of Monolithic Power Systems’ business model and the uncertainties present in a rapidly evolving semiconductor landscape.

Is now the time to buy MPWR? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Monolithic Power Systems’s Q3 Earnings Call

• Joshua Buchalter (Cowen): Asked about the growth outlook for the enterprise data segment, especially in light of previously guided flat to declining performance. CFO Bernie Blegen responded that layering in new customers was driving momentum, with positive trends expected to continue into next year.
• Ross Seymore (Deutsche Bank): Probed the gross margin trajectory as Monolithic Power Systems expands into system-level solutions. CEO Michael Hsing stated that margins should eventually improve thanks to automation and proprietary test equipment, but gains would be slow due to the complexity of scaling solutions.
• Tore Svanberg (Stifel): Questioned the company’s progress in migrating enterprise data customers from chips to modules and subsystems, and the pace of this transition. Hsing explained that module sales remain less than one-third of revenue but are expected to grow as customers adopt higher-density power products.
• Christopher Caso (Wolfe Research): Asked about growth expectations and market share changes in the enterprise data segment. Hsing and Blegen said the business is well positioned for future growth, with higher power density products gaining traction and broader industry adoption anticipated over the next two years.
• Wei Chia (Citi Research): Sought insight into the competitive landscape and the importance of new materials like gallium nitride and silicon carbide. Hsing said Monolithic Power Systems is developing its own silicon carbide modules while continuing to innovate with silicon-based power devices, balancing cost-effectiveness and performance.

Catalysts in Upcoming Quarters

In the next few quarters, the StockStory team will monitor (1) the pace at which automotive and robotics full-system solutions ramp up, (2) further migration toward modules and integrated solutions across industrial and enterprise markets, and (3) the company’s ability to maintain supply chain efficiency and margin stability as order cycles remain short. Progress in expanding the adoption of high-density power products and new market entries will be additional markers of execution. Additionally, the evolution of inventory management practices and the impact of new design wins in both automotive and robotics will be key factors to watch.

Monolithic Power Systems currently trades at $1,003, down from $1,087 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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