This Nvidia supplier’s stock is down 30% in 3 months—why does Deutsche Bank still say it’s a buy?

• Shares of Monolithic Power Systems fell more than 30 percent.

• The company’s fourth-quarter outlook and reports that sales to Nvidia may fall have sent shares down sharply in the final months of the year.

• Analysts have been eyeing the expanding market for AI-connected customers as a revenue booster in the coming years.

After hitting record highs last year, Monolithic Power Systems ( sharesMPWR) has fallen more than 30% since the semiconductor company’s last earnings report in late October, but analysts are bullish on the stock.

In a note earlier this week, Deutsche Bank analysts added Monolithic stock to their “Top Picks” list and called the latest slide a “buy opportunity.” The analysts reiterated their $900 price target, citing revenue growth and improved margins over the next two years as positive catalysts.

Monolithic beat earnings estimates in the third quarter, but a forecast that the company’s revenue growth would be “roughly flat” in the fourth quarter rattled investors and the stock fell 17 percent overnight.

Shares He took another shot In November, a report suggested that Nvidia (NVDA) was considering reducing the amount of components it buys from Monolithic for Blackwell’s platform. He had commentators. Blackwell was mentioned earlier As a positive stimulus for monolithic accumulation.

Deutsche Bank analysts wrote that although Monolithic has lost share among NVIDIA vendors, the company should “continue to deliver strong AI-related growth” as the consumer market expands.

While the company’s valuation is “at the high end of our comfort zone,” the analysts said it was justified by Monolithic’s “consistent performance, industry-leading growth, diversity of growth drivers and sustainable margin-expansion potential.”

Ten of the 11 analysts tracked by Visible Alpha rate the hardware maker’s stock a “buy” rating, with one a “hold” rating. The $822.91 average price target is more than 30% higher than Friday’s closing price of $625.82, with analysts predicting the stock will make up most of the ground it lost after its third-quarter report.

Monolithic is scheduled to release its fourth quarter earnings report on February 6 after the call.

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