Monolithic Power Systems: Record Quarter Driven by Enterprise Data Surge, Company Pushes Capacity Target Beyond $6 Billion as CPU Share Passes 30% Threshold
Q2 2026 Earnings Call, July 30, 2026
Monolithic Power Systems posted record quarterly revenue of $981 million in the second quarter, up 22% sequentially and 48% year-over-year, as every end market grew and enterprise data surged 45% sequentially. The results prompted the company to raise its full-year growth expectations for that segment and to extend its capacity target beyond the $6 billion mark it had previously set, according to CFO Tony Balow. The board also authorized an additional $500 million in stock buybacks, bringing total authorization to $1 billion.
CPU Share Crosses Management's Own Failure Threshold
The most concrete new data point on the call came from founder and CEO Michael Hsing on CPU server power share. Asked by Wolfe Research's Chris Caso about the company's position in CPU power ahead of agentic AI-driven demand, Hsing referenced a bar he had set on a previous call. "I mentioned in the earnings call that if it's lower than 30%, I call it failures," he said. "I think that we'll comfortably say now we're past that. And that's where the good position we are in now, and we'll continue that." That is a rare specific share disclosure from a management team that otherwise declines to quantify position by socket or customer, and it suggests CPU power has moved from an emerging opportunity to an established, scaled revenue line inside enterprise data. Balow added that agentic AI-driven CPU demand could become an "additional growth vector" but acknowledged the company cannot cleanly separate CPU-attached sales from broader AI-related sales, limiting the precision of any forward numbers.
Enterprise Data Guidance Raised Sharply, With Book-to-Bill Above 1
The scale of the upside in enterprise data was the standout number of the quarter: TD Cowen's Joshua Buchalter noted the segment added nearly $120 million sequentially, and management responded by lifting its full-year growth floor for that end market from 85% to 130%, a substantial upward revision that signals confidence extends well beyond a single quarter. Balow pointed to low channel inventory as evidence the growth reflects underlying demand rather than restocking, while Hsing emphasized the customer base is not concentrated: "We don't have any concentrated customers... we engage from a large to small." Balow disclosed that book-to-bill remained "well above 1" for a second consecutive cycle, giving the company more than a quarter's worth of visibility, though he was careful to temper expectations for 2027, calling any specific number premature.
New DDR5 Memory Controller Signals Technology Expansion
MPS disclosed it has received initial orders for high-speed DDR5 memory interface components, a genuinely new technical capability for the company. Hsing described the underlying work as foundational: "This is a high speed, high—very high speeds into the gigahertz kind of things and very positioning pretty much as analog circuitry. And we can expand the technology to other communications... these are true fundamental know-hows." Management was explicit that this is early-stage and not yet a revenue driver worth modeling, but the comment about migrating the underlying technology into other communications applications beyond memory is a notable expansion of the company's addressable technology base, and Hsing's closing line—"in the history, when we were mentioning something, it will turn into our revenue"—reads as a deliberate signal to analysts not to dismiss it.
800-Volt Data Center Architecture and a Reversal on GaN
MPS began sampling high-voltage AC-to-DC products for 800-volt data center architectures, moving beyond its existing AI and server core power solutions. More striking was Hsing's admitted reversal on gallium nitride, a technology he has publicly dismissed in the past. "In the past, I openly said I don't believe GaN... now I think it's proof I'm wrong, but it's up to a point where we can't ignore GaN," he said, confirming the company developed its own GaN technology last year and now has a working device. For the 800-volt push specifically, however, MPS is relying entirely on its own silicon carbide devices rather than GaN. Timing for revenue remains entirely dependent on when the industry transitions data center architectures to 800 volts, which Hsing said the company cannot predict with any more precision than the market itself: "We know as much as you know."
Building Automation: A Surprisingly Large TAM, Gated by Software
In response to a question from Truist's William Stein about robotics and building automation, Hsing offered an unusually candid disclosure about both the opportunity size and the company's current limitations. He noted a one-million-square-foot building is currently installing MPS building controls, but said the hardware is essentially complete while software remains the gating factor: "We're still lagging on the software. The hardware is all done with some minor revisions, but the software is the ease of use and how we implement it. And by the end of this year, we should be able to complete everything." He sized the opportunity at $40 billion to $50 billion, a figure he says surprised him personally, and said multiple potential customers are waiting for MPS to complete the software before installing. On robotics, commentary was vaguer and more skeptical, with Hsing noting substantial activity from Chinese entrants but describing MPS's own robotics use case as internal—primarily testing and reliability automation in its own factories—rather than a confirmed external humanoid robotics customer base today.
Optical and Power Module Competitive Positioning
On competition within optical transceivers, Needham's Quinn Bolton pressed on whether MPS competes primarily against PMIC makers or discrete DC-to-DC suppliers like Texas Instruments and Analog Devices. Hsing's answer leaned on density rather than a direct competitive mapping: "I said with a straight face, we are the highest power density company in the world now. And I don't know about the optical market segment. As long as we provide the best power density, we will win all these sockets, including optical modules." Balow added that share gains remain available at some customers and that the combination of TAM growth and share gains leaves "a very substantial growth opportunity" in communications, though the company continues to decline to quantify exact share figures.
Capacity Build-Out Shifting From Wafers to Systems
Management gave incremental color on the capacity expansion beyond $6 billion, clarifying that the harder constraint now is not front-end wafer capacity but back-end module assembly, which Hsing described as more complex than consumer electronics assembly: "It's a 3D effect. It's more complicated than you assemble a phone even." Geographic split between China and non-China capacity remains fluid and demand-driven rather than fixed, according to Hsing, who said the balance "is not settled down yet." New capacity is being added primarily on existing process nodes rather than newer ones, and Hsing characterized the current capacity scale-up as requiring new operational approaches distinct from the company's wafer-focused playbook developed since 2017, though he stopped short of calling it the most difficult expansion period in the company's history, citing differing constraints across past cycles.
Segments to Watch: Consumer and Notebook Remain Soft
Not every part of the business is participating in the upcycle. Hsing directly flagged consumer as lagging "because of all the efforts that we focused on it," while Balow separately noted continued caution on notebook-related storage and compute demand heading into the second half. Automotive remains on track for a second-half ramp with full-year growth expected in the mid-teens, aided by more than 1,500 new design sockets won year-to-date, which management stressed are broadly distributed across zonal architecture, 48-volt systems, battery, and LiDAR applications rather than concentrated in ADAS alone. A new RCD product line remains in sampling and, per Balow, "is not going to be a needle mover in 2026."
Margins and Pricing Discipline
On pricing, Hsing pushed back firmly on any suggestion that the enterprise data upside reflects opportunistic price increases tied to tight supply: "MPS never gouge price when the supply chain is tight... when the supply chain is tight, raise price; how about when oversupply, reduce price, we don't. We operate in a consistent way and our customers appreciate that." Balow said the limited price increases taken have been tied to specific input cost inflation, customer-requested expedites, or requests for non-China supply chains, rather than broad list price hikes. CFO Robert Dean noted gross margin guidance was nudged slightly higher off the back of strong order levels, though Hsing acknowledged the company remains at the low end of its long-term model and reiterated a preference for growth over margin optimization: "Nobody wants us to have a high gross margin with lack of growth."
Data center-related exposure across enterprise data, communications, and portions of storage and compute is now approaching roughly half of total revenue, a concentration Balow did not dispute when raised by William Blair's Ben Naji, even as Hsing maintained that MPS's strategic posture remains deliberately market-agnostic: "We never focus on any market segment... we are not really gold diggers out there to find an empty mountain."