About MONOLITHIC POWER SYSTEMS INC
Monolithic Power Systems, Inc. engages in the design, development, marketing, and sale of semiconductor-based power electronics solutions for the computing and storage, automotive, industrial, communications, and consumer markets. The company provides direct current (DC) to DC integrated circuits (ICs) that are used to convert and control voltages of various electronic systems, such as portable electronic devices, wireless LAN access points, computers and notebooks, monitors, infotainment applications, and medical equipment. It also offers lighting control ICs for backlighting that are used in systems, which provide the light source for LCD panels in notebook computers, monitors, car navigation systems, and televisions, as well as for general illumination products.
The company sells its products through third-party distributors and value-added resellers, as well as directly to original equipment manufacturers, original design manufacturers, electronic manufacturing service providers, and other end customers in China, Taiwan, Europe, South Korea, Southeast Asia, Japan, the United States, and internationally. Monolithic Power Systems, Inc. was incorporated in 1997 and is headquartered in Kirkland, Washington.
MPWR operates in the Manufacturing | Electronic Equipment | headquartered in SAN JOSE, Washington | approximately 3,250 employees | led by CEO Michael R. Hsing.
The $44.1B question: What happens when a company this good becomes this expensive?
In the rarefied air of Silicon Valley valuations, MONOLITHIC POWER SYSTEMS INC sits at a peculiar crossroads. The company that once defined an era now finds itself redefining another — and investors are paying a premium for the privilege of coming along.
At $44.1B in market capitalization, MONOLITHIC POWER SYSTEMS INC (MPWR) currently ranks #191 in our quantitative model, with a composite score of 76.6/100. That places it firmly in "Strong Buy" territory — our highest conviction rating.
But here's the thing about stocks priced for perfection: They leave no room for error.
The Numbers That Matter
Let's start with what's undeniably true. Our 6-factor model gives MPWR the following scores:
| Factor | Score | Weight | Assessment |
|---|---|---|---|
| Quality | 87/100 | 30% | Exceptional |
| Value | 79/100 | 15% | Fair |
| Momentum | 75/100 | 25% | Accelerating |
| Investment | 32/100 | 10% | Low |
| Stability | 40/100 | 10% | Volatile |
| Short Interest | 57/100 | 10% | Normal |
The quality score of 87/100 is the headline here. It reflects profitability metrics that would make most CFOs weep with envy:
- ROE: 20.9%
- Net Margin: 24.2%
- Gross Margin: 55.1%
These aren't just good numbers. They're the kind of numbers that make MPWR a "must-own" stock for institutional portfolios.
The Bull Case
"If you could design a business in a laboratory, it would look something like MPWR."
The bull case writes itself:
- Quality is persistent. Academic research shows high-quality stocks outperform by 4-6% annually over long periods. MPWR is quality defined.
- Momentum is real. With a momentum score of 75/100, the stock has been recognized by the market — and momentum tends to persist.
- The moat is deep. Companies with these margins don't lose them easily. The competitive position is entrenched.
The Bear Case
But here's what keeps value investors up at night:
- Valuation compression risk. At current levels, the stock is priced for continued perfection. Any stumble — a missed quarter, a competitive threat, a macro slowdown — could compress the multiple from 23.3x to the low 20s. That's a 20-30% decline without anything fundamentally "wrong."
- The crowded trade problem. When everyone owns a stock, who's left to buy? Momentum works until it doesn't.
- Mean reversion. Trees don't grow to the sky. At some point, growth decelerates.
The Valuation Framework
| Scenario | Assumption | Fair Value | Upside/Downside |
|---|---|---|---|
| Bear | Multiple compression to 20x | -20% | Downside |
| Base | Current trajectory continues | +10-15% | Modest upside |
| Bull | Momentum accelerates | +30-40% | Significant upside |
The risk-reward is ... fine. Not exceptional. Not terrible. Just fine.
The Bottom Line
MONOLITHIC POWER SYSTEMS INC is exactly what it appears to be: a high-quality business with strong momentum trading at a premium price. Whether that's attractive depends entirely on what kind of investor you are.
For long-term, buy-and-hold investors, MPWR is a core holding. For value investors or short-term traders, look elsewhere.
The company is priced for perfection — and in markets, as in life, perfection is a fragile thing.
⭐⭐⭐⭐⭐ Rating: 5-Star Strong Buy
Score: 76.6/100 | Rank: #191 of 3,571 stocks
Sector: Technology
This analysis reflects the views of Blank Capital Research as of February 16, 2026. It is not investment advice. Past performance does not guarantee future results.