What Happened?
Shares of power management chips maker Monolithic Power Systems (NASDAQ: MPWR) jumped 12.2% in the afternoon session after the company posted strong second-quarter results that surpassed expectations and offered an optimistic forecast for the upcoming quarter. The power solutions company reported revenue of $664.6 million, a 31% increase from the previous year. This growth was fueled by strong demand across its various markets, with the Storage and Computing segment posting a remarkable 70% year-over-year jump. Looking ahead, the company projected third-quarter revenue between $710 million and $730 million, which exceeded analysts' predictions. This positive outlook prompted several investment firms, such as KeyBanc, to raise their price targets on the stock and signaled confidence in the company's continued performance.
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What Is The Market Telling Us
Monolithic Power Systems’s shares are extremely volatile and have had 30 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 16 days ago when the stock dropped 3.1% as a cautious outlook from semiconductor equipment giant ASML sparked a broad sell-off across the sector, hitting chipmakers and equipment suppliers alike. The negative sentiment was triggered after the Dutch firm, whose complex machines are essential for producing advanced chips, warned it could no longer guarantee growth in 2026. ASML's management cited "increasing uncertainty driven by macro-economic and geopolitical developments," including the potential for new U.S. tariffs.
As an industry bellwether, a company whose performance is seen as an indicator of the entire sector's health, ASML's comments are a key signal of future capital spending. The warning sent a chill through the market, as concerns grow that trade tensions could disrupt the highly globalized semiconductor supply chain and slow down investment from chip manufacturers.
Monolithic Power Systems is up 34.1% since the beginning of the year, but at $796.90 per share, it is still trading 15.9% below its 52-week high of $947.16 from August 2024. Investors who bought $1,000 worth of Monolithic Power Systems’s shares 5 years ago would now be looking at an investment worth $2,969.
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