We recently published a list of 10 High Growth Semiconductor Stocks That Are Profitable Heading into 2025. In this article, we are going to take a look at where Monolithic Power Systems, Inc. (NASDAQ:MPWR) stands against other high growth semiconductor stocks that are profitable.
Semiconductors have led industrial advancements and aided key applications such as personal computing, data centers, and cloud computing. As per PwC, Memory ICs were the fastest-growing semiconductor category over the previous 2 decades, with DRAM and HBM standing out. The broader DRAM market is supported by cost and scale, while HBM, because of its advanced technological requirements, reflects a high-barrier, closed-loop ecosystem.
Global Semiconductor Sales Rose 20.7% YoY in November 2024
The Semiconductor Industry Association (SIA) announced that global semiconductor sales touched $57.8 billion during November 2024 month, demonstrating 20.7% growth as compared to November 2023 total of $47.9 billion and 1.6% growth as compared to the October 2024 total of $56.9 billion. As per the report published by SEMI (Semiconductor Equipment and Materials International), the semiconductor industry is expected to begin 18 new fab construction projects in 2025. These new projects will include three 200mm and fifteen 300mm facilities. Notably, the majority will begin operations from 2026 – 2027.
In 2025, the Americas and Japan will be the leading regions with 4 projects each. Next, China and Europe & Middle East regions have 3 planned construction projects. Finally, Taiwan has 2 planned projects, with Korea and Southeast Asia having 1 project each for this year. As per SEMI’s President and CEO, investments have been fueling leading-edge and mainstream technologies to cater to dynamic global demands. Gen-AI and high-performance computing continue to fuel advancements in the leading-edge logic and memory segments. However, mainstream nodes have supported crucial automotive, IoT, and power electronics applications.
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Semiconductor Capacity to Ramp Up
SEMI projects semiconductor capacity to accelerate further, with a 6.6% yearly growth rate to a total of 33.6 million wafers per month (wpm) for 2025. This expansion is expected to primarily stem from leading-edge logic technologies in high-performance computing (HPC) applications and higher penetration of generative AI in edge devices. Overall, the broader semiconductor industry continues to focus on building advanced computing capabilities, and responding to the increased computational demands of LLMs.
Moving forward, foundry suppliers are expected to be the leaders in purchases of semiconductor equipment. The Foundry segment can increase capacity by 10.9% YoY, increasing from 11.3 million wpm in 2024 to 12.6 million wpm in 2025.
Our Methodology
To list the 10 High Growth Semiconductor Stocks That Are Profitable Heading into 2025, we conducted extensive research and scanned through several online rankings to shortlist companies having ~10% revenue growth over the previous 5 years and TTM net income of at least $400 million. We also mentioned the hedge fund sentiments around each stock, as of Q3 2024. Finally, the stocks were ranked in ascending order of their hedge fund sentiments.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An engineer examining a DC to DC integrated circuit board, looking for any flaws.
Monolithic Power Systems, Inc. (NASDAQ:MPWR)
5-year Sales Growth: ~27.11%
TTM net income: $434.2 Million
Number of Hedge Fund Holders: 38
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is a semiconductor company, specializing in power solutions. The company’s business focuses on designing, developing, and manufacturing integrated circuits utilized for efficient power management in a range of applications. Citi initiated coverage on the company’s shares, providing a “Buy” with a price objective of $700. Monolithic Power Systems, Inc. (NASDAQ:MPWR)’s sales growth is expected to be driven by the anticipated analog inventory replenishment. Furthermore, Citi expects that expanding AI and automotive markets is expected to offset potential losses in the company’s market share.
Elsewhere, Truist Securities’ analyst lauded the company’s strong footing with a variety of AI customers. This diverse customer base can aid Monolithic Power Systems, Inc. (NASDAQ:MPWR)’s growth over the next few years. The company is being recognized for its broad engagement throughout the AI sector, which can translate into long-term growth despite short-term market challenges. The elevated investments in AI hardware throughout industries directly correlate with increased demand for power management solutions. With AI workloads becoming more energy-intensive, Monolithic Power Systems, Inc. (NASDAQ:MPWR)’s emphasis on energy-efficient power solutions can support its growth prospects.
Fred Alger Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Monolithic Power Systems, Inc. (NASDAQ:MPWR) designs high-performance power management solutions, leveraging its expertise in analog design, proprietary process technologies, and system-level applications. Its fabless manufacturing model enables nimble innovation and scalability without requiring the high volumes typical of peers with internal manufacturing. The company serves diverse end markets, including enterprise data, where it has been the sole supplier of power management integrated circuits (ICs) for Nvidia’s AI chips since early 2023, driving significant growth. However, recent reports of potential share loss on Nvidia’s Blackwell platform due to technical issues, which management refutes, have raised some concerns. While management acknowledges the eventual introduction of additional suppliers, we believe these fears are overblown.”
Overall, MPWR ranks 10th on our list of high growth semiconductor stocks that are profitable heading into 2025. While we acknowledge the potential of MPWR as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than MPWR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
