Monolithic Power: Capitalizing on the AI Infrastructure Boom

Monolithic Power Systems is demonstrating robust financial health, driven by impressive quarterly results and a strategic pivot toward high-performance power management solutions. The company's recent dividend increase and imminent inclusion in the Nasdaq-100 index are drawing significant investor interest. The central question for the market is whether these factors provide sufficient momentum to sustain its recent rally.

The company's third-quarter financials, covering the period ending September 30, 2025, revealed substantial growth. Revenue climbed to $737.2 million, marking an 18.9% year-over-year increase and a 10.9% sequential rise from the previous quarter. Profitability metrics were equally strong. The non-GAAP net income reached $227.1 million, or $4.73 per diluted share, while GAAP net income was $178.3 million. A GAAP gross margin of 55.1% and an operating margin of 26.5% highlight the firm's efficient cost management within a competitive sector.

These figures underscore why market participants increasingly view the company as a key beneficiary of structural demand stemming from data centers and artificial intelligence infrastructure.

Strategic Drivers and Forward Guidance

A clear strategic shift is underway at Monolithic Power, with a growing emphasis on high-margin power management products. By the second quarter of 2025, 52% of total revenue was derived from Enterprise Data, Storage, and Computing—segments directly fueled by the expansion of AI servers and high-performance computing. Market research cited in the source material projects growth of 30–40% for the Enterprise Data segment through 2026.

The industrial business is also performing well, posting quarterly revenue growth of 18.4% and a 25.7% increase compared to the prior year, largely driven by demand from factory automation. For the fourth quarter of 2025, management has provided revenue guidance in the range of $730 million to $750 million.

Should investors sell immediately? Or is it worth buying Monolithic Power?

Key Data Points:
* Q3 Revenue: $737.2 million (+18.9% YoY; +10.9% QoQ)
* Q3 Profitability: Non-GAAP Net Income of $227.1 million; GAAP Gross Margin of 55.1%; Operating Margin of 26.5%
* Dividend: A Q4 dividend of $1.56 per share is scheduled for payment on January 15, 2026 (Record Date: December 31, 2025). The company has a 12-year history of dividend payments, with the most recent increase at 24.8%.
* Index Inclusion: Entry into the Nasdaq-100 index becomes effective on December 22, 2025.
* Q4 Outlook: Management forecasts revenue between $730 million and $750 million.

Despite these solid fundamentals, recent technical indicators suggest a more cautious near-term sentiment. The last available closing price was €807.80, approximately 7.3% below the 52-week high. A 14-day Relative Strength Index (RSI) reading of 33.8 points to conditions nearing oversold territory, while 30-day volatility remains relatively elevated at 45.8% annualized. This combination explains why some prudence persists among traders.

Near-Term Catalysts and Considerations

Two imminent events will likely influence share price action in the coming weeks: the official addition to the Nasdaq-100 on December 22, 2025, and the dividend payment on January 15, 2026 (with a Record Date of December 31, 2025). Confirmation of the strong Enterprise Data trends and the company meeting its Q4 revenue guidance would likely bolster demand for the equity. However, should technical indicators remain weak or if the company's results fall short of expectations, the stock could face near-term pressure.

In summary, Monolithic Power's fundamental position appears solid, with sustained growth in AI and data center markets serving as the primary engine. Whether the equity can extend its recent performance now hinges on the confirmation of fourth-quarter results and market behavior surrounding its upcoming index inclusion.