Monolithic Power Systems Inc. (NASDAQ: MPWR) added more than 10% to its share price after a solid earnings beat earlier this month. The chipmaker’s stock rose to a six-month high after Monolithic issued in-line guidance and raised its dividend payment. The stock’s share price is up about 24% over the past 12 months and traded up more than 15% Thursday morning.
A relatively modest 13 analysts cover the stock, and 12 rate the shares at Buy or Strong Buy. The second-quarter earnings estimate calls for a 2% sequential decline, and the full-year estimate calls for a 2.8% increase. Profits are expected to slip by more than 6% sequentially and by nearly 4% for the full year. As is the case with AMD, Monolithic’s exposure to the faltering PC market is not going to be overcome easily or quickly.
The stock traded up more than 15% Thursday morning at around $480, still below its average price target of $510. By fundamental measures, the stock is near the bottom of the tech sector. It has been, however, a top performer over the long haul, with a share price increase of nearly 1,900% over the past 10 years and a total return of nearly 2,100%.
Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM), or TSMC as it is known, has added about 16.5% to its share price over the past 12 months. The company is the world’s largest manufacturer of computer chips and the primary producer of Nvidia’s products. While the 12-month gain is quite modest by the standards in play here, over the past three years, TSMC’s share price has risen by nearly as much as AMD’s. The massive investments of capital and time needed for building new fabs do not lend themselves to massive multiples.
TSM’s trailing 12-month price-to-earnings multiple ranks the company near the bottom of the tech sector. Its total return over five years or 10 years, however, ranks the company near the top of the sector.
Shares traded Thursday morning near the average price target of around $102.50, but still below it. Of 28 analysts covering the stock, 27 recommend the shares with a Buy or Strong Buy rating.
One final note. There is probably not much question that the so-far confidential IPO filing from British chip designer Arm will get a boost as well from Nvidia’s strong view of the AI-driven demand for computing power. Arm licenses its designs and software to Nvidia, Apple and a host of other high-end computing firms. The company’s current owner, Softbank, is said to be looking for around $10 billion for some percentage of the company that has been valued at as much as $70 billion. Details remain scarce, but at least one report said Arm is looking at a September initial public offering.
Originally published at 24/7 Wall St.
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