Why Is Monolithic Power Systems Stock Up Today?

Monolithic Power Systems shares closed Friday's session up 8.3% at $1,426.03, extending a move that began after the company reported second-quarter results late Thursday. Shares had jumped as much as 10.5% to $1,448 in the immediate reaction before settling into Friday's close.

What the company reported

Revenue reached a record $980.6 million, up 47.6% from a year earlier. Non-GAAP diluted earnings per share were $6.50, ahead of the $5.88 analysts had expected; GAAP diluted earnings per share were $5.22. Non-GAAP gross margin was 55.6%.

The segment doing the work was Enterprise Data -- server, storage and AI-accelerator power components -- which grew 164.3% year over year to $380.6 million and now makes up 38.8% of total revenue. A business that size growing at that rate is unusual, and it is a direct read on how much AI-server buildout is still translating into demand for the power-delivery chips MPS sells, rather than for the processors themselves.

What management said

Chief executive Michael Hsing said the results demonstrate "the strength of our diversified model and our continued success in transforming from a chip-only, semiconductor supplier to a full service solutions provider." For the third quarter, the company guided to revenue of $1.14 billion to $1.16 billion, a roughly 56% year-on-year increase at the midpoint and well above what analysts had penciled in before the report.

What to watch

Sell-side analysts still expect MPS's longer-term revenue growth to decelerate to about 26.4% over the next twelve months, well below the pace just reported, so the next test is whether Enterprise Data demand continues at this rate into the fourth quarter or whether the current quarter's guide is closer to a peak.