Founded in 1997, Washington-based Monolithic Power Systems, Inc. (MPWR) has emerged as a fabless semiconductor leader, spearheading innovation in high-performance power electronics. From telecommunications and cloud computing to automotive and consumer technology, Monolithic’s cutting-edge products power a wide array of critical applications. The company’s market cap presently stands at $28.8 billion. 

Companies worth $10 billion or more are generally described as “large-cap” stocks, and Monolithic fits right into that category, with its market cap exceeding this threshold. With a reputation for exceptional reliability, unmatched efficiency, and a commitment to environmental sustainability, the company stands as a trailblazer in the power electronics industry, driving progress across diverse sectors.

However, the stock has pulled back a notable 36.5% from its August high of $959.64. In fact, over the past three months, MPWR has plunged almost 27.1%, significantly trailing behind the broader Dow Jones Industrials Average’s ($DOWI) 8.8% gains over the same time frame.

In the longer term, MPWR stock is up roughly 6% over the past 52 weeks, lagging behind DOWI’s healthy 22.8% annual gain. Plus, in 2024, the stock is in negative territory, posting a decline of 3.4% compared to DOWI’s 17.8% gain on a YTD basis.

To confirm the bearish price trend, MPWR has been trading below its 200-day and 50-day moving averages since October's end. 

Despite reporting a rosier-than-expected Q3 earnings report on Oct. 30, shares of Monolithic took a significant hit, plunging a substantial 17.5% in the next trading session. This sharp sell-off was particularly fueled by the company’s lukewarm Q4 outlook and a high-profile downgrade, casting a shadow over the company’s earnings triumph and shaking investor confidence. 

Yet, in the competitive arena of semiconductor space, Monolithic’s rival, Microchip Technology Incorporated (MCHP), has heavily underperformed not just Monolithic but also the broader equity benchmarks, posting declines of 28.1% over the past 52 weeks and 31.4% on a YTD basis. 

Given the chip stock’s relative underperformance, Wall Street remains cautiously optimistic on MPWR. The stock has a consensus rating of “Moderate Buy” from the 13 analysts covering it, and the mean price target of $830.64 suggests a modest 36.2% premium to its current levels.