Monolithic Power Systems (NASDAQ: MPWR), Pure Storage (NYSE: PSTG), and Sea Limited (NYSE: SE) are three companies innovating in power management chips, high-speed cloud storage, and digital commerce in Southeast Asia. Read on to see how these tech leaders offer robust growth potential and deserve a spot on any investment radar -- with just a light dash of AI exposure.
AI is great, but there's so much more to this top stock
Nicholas Rossolillo (Monolithic Power): Monolithic Power is a fabless (it outsources manufacturing) power chip designer. Its name is a nod to founder and CEO Michael Hsing's idea that an entire system of power delivery (all the components used to conduct electricity in an electrical device) could be shrunk down to one chip (thus the "monolithic" moniker).
And as time has gone by, Monolithic is relentless in its drive to keep consolidating power delivery onto those chips, and shrinking those chips down in size. Suffice it to say it's been a winning formula for investors for a long time, as you can see in the chart below.
Monolithic designs power chips and systems for all sorts of applications. However, many of its customers -- especially those in automotive, manufacturing, and communications infrastructure -- are in the midst of a slump. Hsing and the top team are optimistic that these markets will begin to stabilize in the second half of 2024.
In the meantime, Monolithic's "Enterprise Data" segment is skyrocketing. Sales jumped 217% year over year, thanks in no small part to data center servers that support AI and other accelerated computing applications. At $150 million in revenue in Q1 2024, these data center and enterprise compute power chips made up one-third of Monolithic's total sales.
This could make Monolithic a secret bet on the development of AI, especially as data center operators are looking for ways to save money on the power consumption of AI systems like those Nvidia is selling in droves. And of course, Monolithic's other industrial power segments stabilizing would be a nice help.
Shares trade for a premium of over 50 times expected 2024 earnings per share, so the market already has lofty expectations for this chip designer. But as it has proven for years now, Monolithic power chips are in high demand, and helping customers drive down the cost of operating all sorts of tech. Keep this one on your radar at the very least.
