15 Best Growth Stocks to Buy for the Next 5 Years

13. Monolithic Power Systems Inc. (NASDAQ:MPWR)

Number of Hedge Fund Holders: 38

5-Year Revenue CAGR: 27.11%

Upside Potential as of January 15: 47.48%

Monolithic Power Systems Inc. (NASDAQ:MPWR) designs and develops semiconductor-based power solutions for various electronic devices. It partners with manufacturers like NVIDIA to produce these chips and offers critical power management solutions for the rapidly growing AI market.

In mid-December of 2024, Truist analyst William Stein lowered his price target on the company from $887 to $762 while maintaining a Buy rating. This reduction reflects concerns about near-term headwinds within the semiconductor and AI sectors. Despite this, Truist expects the company to benefit from strong AI demand and secure a prominent role in NVIDIA’s upcoming Blackwell GPUs. It powers NVIDIA’s high-performance GPUs. These GPUs are essential for accelerating AI workloads across various applications, including data centers, gaming, and autonomous vehicles.

Notably, automotive revenue surged 28% sequentially in Q3 2024. In the same quarter, the company experienced demand for its power management solutions, particularly for AI applications. It recorded a revenue of $620.1 million, representing a 30% year-over-year growth. This was fueled by improved ordering trends across most end markets and the revenue ramps associated with design wins secured in prior years. While acknowledging potential near-term headwinds in the enterprise data segment, Monolithic Power Systems Inc. (NASDAQ:MPWR) remains optimistic about its long-term growth prospects.

Monolithic Power Systems Inc. (NASDAQ:MPWR) experienced strong performance driven by the demand for its power management solutions, particularly for AI and data center applications. ClearBridge SMID Cap Growth Strategy stated the following in its Q2 2024 investor letter:

“Another top individual contributor was Monolithic Power Systems, Inc. (NASDAQ:MPWR), in the IT sector, which makes semiconductor-based power electronics for the computing and storage, automotive, industrial, communications, and consumer markets. Continued demand for AI-related companies and beneficiaries and anticipation of greater demand for data center components such as power management hardware for CPUs helped drive strong performance in the quarter. We believe Monolithic is one of the most attractive semiconductor plays within the SMID universe and that the company will continue to gain share in analog semiconductors as it wins design contracts.”