We recently compiled a list of the 10 Undervalued Chip Stocks Near 52-Week Lows. In this article, we are going to take a look at where Monolithic Power Systems, Inc (NASDAQ:MPWR) stands against the other undervalued chip stocks.
Energy and EV stocks continue to be in focus as Donald Trump signs a bunch of executive orders that will have far-reaching impacts on many industries. He even revoked an executive order related to AI, though it addresses a matter that may not directly impact a company’s sales in the near term. AI stocks are going under the radar for a few weeks but with earnings season about to get into full gear, we may not have the same opportunities in a couple of weeks that we have now.
Many of the chip stocks continue to stay undervalued. The main reason is the lack of demand in the niche industries that these companies serve. But this demand will eventually shift at some point in 2025, which is what makes them so attractive to consider at this point.
We came up with 10 stocks that we believe are undervalued, near their 52-week lows, and present good investment opportunities. To come up with the 10 undervalued chip stocks that are near 52-week lows, we only considered stocks with a market cap of between $10 billion and $200 billion that hit their 52-week lows recently.
Close-up of Silicon Die are being Extracted from Semiconductor Wafer and Attached to Substrate by Pick and Place Machine. Computer Chip Manufacturing at Fab. Semiconductor Packaging Process.
An engineer examining a DC to DC integrated circuit board, looking for any flaws.
Monolithic Power Systems, Inc (NASDAQ:MPWR)
Monolithic Power Systems is 14% above its 52-week lows, which it hit in November last year. The company announced a weak Q3 performance which resulted in a significant correction in the stock. For many, this was a buying opportunity and with the price trading sideways for the most part of the last two months, the opportunity is still there for the taking.
MPWR created its unique economic moat by targeting efficiency in the power management chip market. It did so by adopting higher power density in its chips. This niche approach has helped it carve out a small portion of the market for itself even when it cannot compete with major semiconductor players on all fronts.
While other semiconductor manufacturers create separate equipment for each component in a chip, MPWR integrates everything on a single design, thus reducing the switching and conduction losses as a result of shortened electric paths. The company also operates on a lean model by outsourcing its manufacturing to companies that specialize in modern semiconductor manufacturing technologies. In this way, the firm can focus on its core niche technology, which is what has helped it drive nearly 245% returns in the last 5 years, despite the stock currently trading at two-thirds of its all-time highs!
Overall MPWR ranks 7th on our list of the undervalued chip stocks near 52-week lows. While we acknowledge the potential of MPWR as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as MPWR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
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