What Happened:

Shares of power management chips maker Monolithic Power Systems (NASDAQ:MPWR) jumped 9.3% in the afternoon session after the company reported first quarter results which blew past analysts' EPS expectations. Next quarter's revenue guidance also came in higher than Wall Street's estimates, as the company observed "consistently upward ordering patterns." Notably, demand for AI servers was strong, growing over 200% year on year, and driving roughly a third of revenues. The strong performance in the enterprise data business likely assured investors that MPWR remained Nvidia's major supplier of AI servers. However, like most of the semiconductor companies that have reported earnings this season, MPWR maintained a cautious tone regarding business conditions in the second half of the year. On the other hand, its gross margin declined, and its operating margin decreased. Overall, this quarter's results still seemed fairly positive, and shareholders should feel optimistic.

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What is the market telling us:

Monolithic Power Systems's shares are very volatile and over the last year have had 11 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the stock gained 17% on the news that the company reported fourth-quarter results and provided strong revenue guidance for the next quarter, which topped analysts' expectations. Its revenue and EPS also narrowly outperformed Wall Street's estimates during the quarter. The company also highlighted the expanded market opportunity estimated at $1 billion following the acquisition of Netherlands-based startup Axign B.V, which provides programmable multi-core digital signal processors. On the other hand, its gross margin fell, and its operating margin decreased during the quarter. Overall, this was still a strong quarter for Monolithic Power Systems.

Monolithic Power Systems is up 18.8% since the beginning of the year, and at $718.80 per share it is trading close to its 52-week high of $767.60 from March 2024. Investors who bought $1,000 worth of Monolithic Power Systems's shares 5 years ago would now be looking at an investment worth $4,595.

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