QS Research · Michael Burry's Scion Capital analyst template · 2006
MONOLITHIC POWER SYSTEMS, INC. (MPWR)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -28% · downside -48% · upside +12%
At $1,192.81 MPWR trades at 65.1x TTM earnings, 48.9x TTM EBITDA and a 1.0% FCF yield (N28, N26, N29), so there is no deep-value margin of safety even though Q3 2026 revenue rose 63.1% and Q4 is guided to $1.315-1.385B (S28, S98). I keep section 13's TTM EBITDA base of $1.17B (N14) and value the base case at 35x EV/EBITDA: $40.95B EV + $1.09B cash - $0.024B leases = $42.02B / 48.77M shares = ~$862, or -27.8% (N21, N22, N5). Downside at 25x gives ~$622 (-48%) and upside at 55x gives ~$1,341 (+12%), both from the same TTM EBITDA base (N14, N21, N22, N5). That is not enough for a short because the base is not at least -30%, and not a long because the base is negative, so this is a watch pending multiple compression or evidence that growth is durable at a lower multiple. The GAAP margin dip is SBC-driven, not demand-driven, and the balance sheet is net cash, so I would not press a short here.
Key numbers
- Share price: $1,192.81
- Market cap: $58.17B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $3.74B
- EV / EBITDA (TTM): 48.9x
- P/E (TTM): 65.1x
- Price / book: 15.58x
The 15 boxes
- ✓ 1. Long-form business notes
MPWR is a fabless designer of high-performance analog and mixed-signal power semiconductors, incorporated in 1997, selling mainly through distributors and manufacturing through Asian foundries and assembly/test partners. FY2025 revenue was $2.79B, gross profit $1.54B, operating income $728.6M and operating cash flow $838.2M; end markets were led by storage/computing at 26.3% and enterprise data at 25.2%, with automotive at 21.2%. From FY2020 to FY2025 the mix shifted toward enterprise data and automotive and away from consumer/industrial, while product concentration moved beyond the old 95% DC-to-DC mix. FY2024 net income of $1.59B is above pre-tax income of $572.9M, an unexplained gap in the data, so operating income and cash flow are the cleaner business measures.
- ✓ 2. Competitive advantage
MPWR's supported advantage is proprietary process/packaging and analog design know-how: FY2023-FY2025 gross margin was about 55% and operating margin 24-27%, with FY2025 operating cash flow of $838.2M on $172.0M capex. The model is fabless, IP-heavy (2,231 patents/applications at Dec 31, 2025) and design-in driven, with product life cycles typically over 10 years. It is not a scale or brand story: primary competitors include Analog Devices, Infineon, TI and others with greater resources, and ASPs decline over product life. FY2024 net income of $1.59B should be ignored for operating margin because pre-tax income was only $572.9M.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) revenue was $1,202.4 million, up 63.1% y/y, with enterprise data at $506.7 million (42.1% of revenue, +164.6%) and communications at $187.4 million (+134.7%). Gross margin was 55.4%, operating income was $357.7 million (29.8% of revenue), and net income was $271.1 million (22.5%); income tax expense was $95.6 million at a 26.1% effective rate. Cash and short-term investments totaled $1,091.2 million at 2026-09-30, 9M 2026 operating cash flow was $768.1 million, and Q3 2026 buybacks were $453.4 million.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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