On Tuesday, KeyBanc Capital Markets adjusted its price target for Monolithic Power Systems (NASDAQ:MPWR) shares, a leading semiconductor company, increasing it to $975 from the previous $850. The firm also maintained an Overweight rating on the stock.
The decision by KeyBanc comes on the heels of a positive outlook for Monolithic Power Systems, particularly in its relationship with NVIDIA (NASDAQ:NVDA)'s platforms. Monolithic Power is expected to retain a dominant market share of over 80% on NVIDIA's Hopper and Blackwell platforms in the power segment.
The analyst believes that the upcoming Blackwell platform will confer a significant advantage to Monolithic Power, with a 40% average selling price (ASP) uplift as power requirements for the platform are projected to increase from 700W to 1000W.
Furthermore, the firm is poised to benefit from favorable demand trends in the traditional data center sector. This is a significant point of interest as the semiconductor industry continues to evolve and expand into new areas, including artificial intelligence (AI) and data centers.
The analyst's outlook is bolstered by expectations of Monolithic Power's strong performance in the enterprise data market. KeyBanc predicts that the company's revenues in the Enterprise Data segment could surpass $1 billion by 2025, a milestone driven by its solid position in AI and the broader data center market.
The price target increase reflects confidence in Monolithic Power's market position and its potential for continued growth in the evolving tech landscape. The company's stock performance and future revenue projections are likely to be closely watched by investors as it maintains its significant role in powering advanced computing platforms.
In other recent news, Monolithic Power Systems has been the subject of several noteworthy developments. The semiconductor company has reported robust first-quarter earnings, showing significant growth both year-over-year and sequentially from the previous quarter.
Analysts from Oppenheimer and Truist Securities have responded positively, raising their price targets for the company to $900 and $799 respectively, while maintaining Outperform and Buy ratings.
Monolithic Power Systems is projected to capture a significant share of the Blackwell stage 1 power market and hold over 70% of the H100 stage 2 power segment. The company's 48V power solutions are expected to be directly used in Google (NASDAQ:GOOGL)'s TPUv5 later this year or early next year, potentially leading to a substantial increase in average selling price. Furthermore, the firm's modules are forecasted to account for more than 25% of its sales this year, a significant increase from 10% in 2023.
Despite some caution regarding visibility into the second half of the year, Monolithic Power Systems remains confident in its long-term growth strategy. The company is expanding its product portfolio and global supply chain, with a particular focus on high-end audio markets and automotive revenue. These recent developments indicate a favorable environment for continued growth, particularly in AI applications.
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