MPS Earnings: Great Data Center Sales Offset Other Markets’ Softness, Leaving Our Fair Value Intact

We maintain our fair value estimate for wide-moat Monolithic Power Systems at $535 per share after its third-quarter results and fourth-quarter guidance met our expectations. MPS’ sales into data centers did tremendously well in the quarter, but the rest of its end markets continued to see softer customer spending. MPS is on track for a tame year of results by its own high standards, but we continue to expect growth to inflect back up behind its ability to gain share and benefit from trends like artificial intelligence, or AI, and electric vehicles. Despite weak end markets, we see MPS’ share gains across its served markets as sticky and reflective of its wide economic moat. Shares rose 5% on the good results, but we continue to see them as nicely undervalued.