Should You Buy Monolithic Power Stock Before Dec. 22?

Core Insights - Monolithic Power's Q3 2025 results showed strong performance with revenues of $737.2 million, an 18.9% increase YoY, and earnings per share (EPS) of $4.73, up 16.5% from the previous year, exceeding estimates [1][6] - The company has experienced significant growth over the past decade, with revenue and earnings growing at CAGRs of 23.52% and 49.53%, respectively [2] - Monolithic Power is set to join the Nasdaq-100 on December 22, 2025, which is expected to attract substantial passive investment flows [3][5] Financial Performance - Q3 2025 revenues reached $737.2 million, with all key segments showing growth, particularly the Storage and Computing segment, which grew by 29.6% to $186.6 million [1] - The company reported net cash from operating activities of $733.3 million, an increase from $620.7 million in the previous year, and ended the quarter with a cash balance of $1.1 billion, with no short-term debt [7] - For Q4 2025, Monolithic expects revenues between $730 million and $750 million, indicating a projected YoY growth of 19% at the midpoint [7] Market Position and Valuation - Monolithic Power has a market capitalization of $45.3 billion and has seen a 60% increase YTD [3] - The stock is currently trading at high valuations, with forward P/E, P/S, and P/CF ratios of 53.48, 16.31, and 47.35, significantly above sector medians [8] - Analysts project forward revenue and earnings growth rates of 21.36% and 21.93%, respectively, compared to sector medians of 8.06% and 10.75% [8] Competitive Advantages - Monolithic Power's success is attributed to its specialized technology in power management integrated circuits (PMICs), which provides significant profitability advantages [10] - The company maintains a capital-light fabless model, allowing for aggressive reinvestment in new capabilities and fostering innovation [11][12] - Strong customer relationships and proprietary technology create high switching costs and early visibility into next-generation platforms [12] Analyst Sentiment - Analysts have rated MPWR stock as a "Strong Buy," with a mean target price of $1,201, suggesting an upside potential of about 26% from current levels [15]