Monolithic Power gets upgraded to Buy at Loop

Loop upgraded Monolithic Power Systems (NASDAQ:MPWR) to Buy from Hold with a $660 price target.

Shares of the company — which sells semiconductor-based power electronics solutions — climbed about 2% premarket on Monday.

The analysts said that the upgrade follows a nearly 10% sell-off in the week since Loop began coverage of Monolithic on Nov. 11. In addition, the stock is off around 40% from the 52-week-high.

The analysts added that the share pressure has been triggered by — investors coming to the realization Monolithic may not retain 100% PMIC (Power Management Integrated Circuit) market share with Nvidia’s (NVDA) AI GPU systems; and the lumpiness in Nvidia’s orders have created an L shaped pattern in Monolithic’s second half 2024 Enterprise Data revenue (although estimates recently increased for the company due to resurgence in non Enterprise Data segments).

Loop thinks these concerns are overblown. The analysts are confident in the 2025 consensus revenue forecast of $2.66, and they believe Nvidia’s Enterprise Data segment should be accretive to the 20% growth assumed in consensus revenue estimates. In addition, the analysts said that Enterprise Data growth could be boosted more by Al Application-Specific Integrated Circuits, or ASICs, and AMD’s (AMD) M3xx.

Last week, Monolithic said it had no performance issues with its products and that it is still in Nvidia’s next-generation systems.