Power Integrations (POWI): Valuation in Focus After PowiGaN Breakthrough and New NVIDIA Partnership for AI Data Centers

Power Integrations (POWI) shared new details at the OCP Global Summit about its PowiGaN gallium-nitride technology and a collaboration with NVIDIA, highlighting efficiency gains for next-generation AI data centers powered by advanced 800 VDC architectures.

See our latest analysis for Power Integrations.

Power Integrations’ share price surged 24.6% in a single day, sparked by excitement around its new PowiGaN technology and high-profile partnership with NVIDIA for next-gen AI data centers. Despite this short-term momentum, the 1-year total shareholder return remains at -32.5%, signaling that long-term investors are still waiting for a sustained turnaround.

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With shares still far below analyst price targets despite the recent rally, the question now is whether this excitement marks an undervalued entry point for investors or if the market is already factoring in future growth potential.

Most Popular Narrative: 29% Undervalued

Compared to its latest closing price, the prevailing narrative sees a fair value much higher for Power Integrations, based on ambitious growth and operational targets. This sets the stage for a bold vision that fuels optimism about the stock's future.

Power Integrations' proprietary high-voltage GaN technology (currently unmatched at 1250V and 1700V) positions the company to capture premium share in emerging high-density, high-efficiency end-markets such as next-gen AI data centers and automotive. This is likely to boost both average selling prices and gross margins.

Read the complete narrative.

The real surprise is that this valuation leans on jaw-dropping forecasts for both revenue and profit margin expansion. Want to see how a premium tech rating meets sector-topping growth bets? The core assumptions behind this price target could leave you rethinking what’s possible for this stock. Explore what’s really driving the market buzz.

Result: Fair Value of $60.8 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing trade tensions and heavy reliance on consumer appliances could challenge Power Integrations’ growth story if key markets stumble or if competition intensifies.

Find out about the key risks to this Power Integrations narrative.

Another View: Market Multiples Raise a Red Flag

Looking at Power Integrations through the lens of price-to-earnings, its shares trade at 72.1 times earnings, far higher than both the US Semiconductor industry average (35.3x) and its closest peers (43.3x). Even compared to a fair ratio of 42.1x, the premium is striking. This suggests investors may be banking on significant growth, with limited margin for error. Does this premium leave more room for disappointment than upside?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Power Integrations Narrative

If you think the numbers paint a different picture or you want to dive into the details yourself, crafting your own narrative is quick and easy. Get started in just minutes with Do it your way.

A great starting point for your Power Integrations research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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