Can Monolithic Power Systems Stock Fall 30%?

For questions about this article or underlying research, email help@trefis.com.

Monolithic Power Systems (MPWR) stock has fallen 30% or more within a calendar year in five of the last ten years, so a drop of that size would not be new for its holders. The number that should worry them now is free cash flow, which fell 23% from a year earlier in fiscal Q2 2026 even as revenue rose 47.6%. Is that one weak quarter, or has the cash been slipping for longer?

Monolithic Power Keeps Less Of Its Sales As Cash

Over the twelve months to June 2026, Monolithic Power kept 17.8% of its revenue as free cash flow, down from 28% in the twelve months to June 2025. That share had been 32% in the twelve months to June 2024, meaning it has fallen two years running.

The slide came while sales kept growing fast. Revenue rose 34.3% in the twelve months to June 2025 and 28.7% in the twelve months to June 2026, so the business is selling much more while keeping a smaller share of it as cash.

What Thinner Cash Means For Monolithic Power Shareholders

The dividend now takes a bigger share of the cash. Dividends equaled 56% of Monolithic Power’s free cash flow in the twelve months to June 2026, up from 37% a year earlier.

The stock has already lagged the market, losing 15.4% over the six months to October 21, 2026, while the S&P 500 gained 9.3%. Even after that drop, Monolithic Power stock trades at 78.4 times its trailing earnings against 23.0 for the S&P 500, so the price likely still assumes fast growth ahead.

Monolithic Power stock has also fallen harder than the market in recent shocks. During the 2025 US Tariff Shock, it dropped 34.0%, against 19.0% for the S&P 500 ETF.

What Is Going Right At Monolithic Power?

Orders and the balance sheet are both in good shape. On its July 30, 2026 call, management said the enterprise data business grew 45% from fiscal Q1 2026 on strong, broad-based ordering patterns. Management also said its book-to-bill was again well above 1, meaning orders ran ahead of shipments, and that channel inventory for enterprise data remains very low.

Monolithic Power also carries almost no debt. Its debt equals 0.03% of its market value, against 19.7% for the S&P 500.

With strong orders and almost no debt, the cash slide at Monolithic Power is a reason for measured concern rather than alarm. The company is expected to report its fiscal Q3 2026 results for July to September in October 2026, and free cash flow as a share of revenue is the measure to watch.

How To Act On MPWR?

Not necessarily on Monolithic Power Systems alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming, the leaders of their industries, wherever they are. Here are two companies from Monolithic Power Systems’ own industry that have beaten it. Over the five years to October 2026, Advanced Micro Devices stock rose 363% and MACOM Technology Solutions stock rose 310%, while Monolithic Power Systems stock rose 157%.

Finding companies like these takes comparison across industries and sectors, and that is what the Trefis High Quality (HQ) Portfolio does. It holds 30 quality companies in equal weight and, since its inception in September 2020, has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap and Russell 2000. See how we find the leaders.

Spot an error or want more like this? Tell us in 10 seconds.