We recently compiled a list of the 10 Stocks That Will Make You Rich In 2025. In this article, we are going to take a look at where Monolithic Power Systems, Inc. (NASDAQ:MPWR) stands against the other stocks that will make you rich in 2025.
What to Expect from the Stock Market in 2025
Jurrien Timmer, Director of Global Macro at Fidelity Management & Research Company, recently shared his outlook for the stock market in 2025. His analysis reflects cautious optimism, emphasizing potential growth and significant risks. Timmer described 2024 as a “Goldilocks” year for U.S. stock returns, characterized by robust earnings growth and rising valuations. The S&P 500 Index experienced a substantial increase, concluding the year with a gain of approximately 28% as it reached new all-time highs. This performance was driven by strong earnings from major companies, particularly the so-called “Magnificent Seven” stocks whose growth has significantly influenced the overall market dynamics.
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Looking ahead to 2025, Timmer maintained a bullish stance on stocks but cautioned that investors should not expect returns to match the spectacular gains of the previous two years. He noted that while earnings forecasts remain strong, especially for the mega-cap stocks, valuations are stretched, currently sitting in the 90th percentile historically. This suggests that significant further expansion in price-to-earnings (PE) ratios could lead to a bubble scenario, which he believes is unlikely. He expects continued earnings growth to support stock prices in 2025. However, valuations may limit future growth. Timmer suggests that earnings must drive performance rather than further valuation expansion to avoid a bubble scenario.
With the bull market entering its third year, Timmer describes it as being in “later innings,” indicating increased caution regarding future performance. He also suggested several risks that could potentially impact the market in 2025. For instance, heavy reliance on a few mega-cap stocks poses a risk; if these stocks falter, it could drag down overall market performance despite broader participation from other stocks. Secondly, although he does not foresee a return to the high inflation rates of the past decades, he warns that rising inflation could lead to higher interest rates, which would negatively affect the stock market.
Our Methodology
To compile the list of 10 stocks that will make you rich in 2025, we conducted a consensus. We sifted through various internet rankings to get an initial list of stocks expected to explode in 2025. Next, we sourced analyst sentiment for each stock from CNN and ranked our list in ascending order of the analysts’ projected upside potential for the next twelve months. Please note that the data was recorded on Friday, December 20, 2024.
Why do we care about what hedge funds do? 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)
Analysts Upside Potential: 50.62%
Monolithic Power Systems, Inc. (NASDAQ:MPWR) specializes in creating power management solutions for various electronic devices. The company does not manufacture its own chips instead, it designs and develops semiconductor products and partners with other companies including NVIDIA to produce them. Its semiconductor-based power electronic solutions are used as a powerhouse for various AI chips.
ClearBridge SMID Cap Growth Strategy in its Q2 2024 investor letter mentioned Monolithic Power Systems, Inc. (NASDAQ:MPWR) to be one of the top individual contributors to its portfolio. The firm showed confidence that strong demand for AI and data center components can drive MPWR performance higher. The anticipation stood true as the company delivered record quarterly revenue of $620.1 million, representing a 22% increase compared to the previous quarter and a 30% increase from the same quarter last year. Its Enterprise Data segment which deals with providing power management solutions specifically tailored for data centers and computing environments grew more than 86% year-over-year to reach $184.5 million. In addition, the Communication Segment also experienced a remarkable 65% increase in revenue compared to the prior quarter, attributed to new product introductions in Wi-Fi, optical networking, and router solutions. It is one of the best 10 stocks that will make you rich in 2025.
ClearBridge SMID Cap Growth Strategy stated the following regarding Monolithic Power Systems, Inc. (NASDAQ:MPWR) 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.”
Overall MPWR ranks 4th on our list of the stocks that will make you rich in 2025. While we acknowledge the potential of MPWR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an 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.