Why Monolithic Power Systems Stock Is Plummeting Today

Core Insights - Monolithic Power Systems (NASDAQ: MPWR) experienced significant stock sell-offs, with a decline of 11.3% as of 3 p.m. ET, following the release of its Q3 results which, despite beating expectations, led to disappointing forward guidance [2][4] Financial Performance - In Q3, Monolithic reported non-GAAP earnings per share of $4.73, surpassing the average analyst estimate by $0.10. Revenue reached $737.18 million, exceeding expectations by approximately $18.9 million. Year-over-year sales increased by roughly 11%, while adjusted earnings rose about 16.5%. However, the adjusted gross margin slightly decreased from 55.8% to 55.5% [3][5] Future Guidance - The company projects Q4 sales between $730 million and $750 million, with an adjusted gross margin forecasted between 55.2% and 55.8%. Although the guidance appears strong, it did not meet some investors' higher expectations [4][5] Market Outlook - Management indicated potential sales growth of 30% to 40% from enterprise data center customers by 2026. The strong Q3 results and solid guidance, along with momentum in artificial intelligence (AI), suggest that the current sell-off may present a buying opportunity for risk-tolerant investors [5]