Power Integrations (POWI): Valuation Perspectives After Unveiling Next-Gen GaN Tech and NVIDIA Data Center Collaboration

Power Integrations (POWI) has unveiled its latest high-voltage PowiGaN technology at the OCP Global Summit, emphasizing its role in advancing next-generation 800 VDC data center architectures. The company’s collaboration with NVIDIA to accelerate adoption highlights growing momentum in the AI infrastructure space.

See our latest analysis for Power Integrations.

Power Integrations’ collaboration with NVIDIA and its technology reveal have sparked renewed interest in the stock, yet the share price return is still down 29.2% year-to-date and total shareholder return over the past year sits at -30.6%. Momentum has shown some signs of life with a 7.5% gain over the last month. However, longer-term performance reflects ongoing challenges even as the company positions itself at the forefront of next-generation AI data center infrastructure.

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With recent advances in PowiGaN technology and growing collaboration with leaders like NVIDIA, is the current share price a potential entry point for investors, or has the market already taken these growth prospects into account?

Most Popular Narrative: 29% Undervalued

Power Integrations’ consensus narrative points to meaningful upside from the stock’s last close, with analysts’ fair value pegged well above the current market price. This creates a valuation based on strong expectations for revenue and earnings expansion in the years ahead.

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-generation AI data centers and automotive. This is likely to boost both average selling prices and gross margins.

Read the complete narrative.

Want to know what projections justify this premium? The narrative hints at an ambitious profit turnaround, revenue acceleration, and a bold future earnings multiple usually reserved for industry giants. Which growth drivers and forecasts truly move the dial? Dive in to uncover what makes the consensus so bullish on the stock’s trajectory.

Result: Fair Value of $60.8 (UNDERVALUED)

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

However, lingering trade uncertainties and heavy reliance on the cyclical consumer appliance segment could present challenges to Power Integrations’ anticipated growth trajectory.

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

Another View: Multiples Suggest a Premium Price

While analyst forecasts point to significant upside, a look at the price-to-earnings ratio tells a different story. Power Integrations currently trades at 71.8x earnings, which is much higher than both the industry average of 39.5x and its fair ratio estimate of 43.3x. This suggests the stock carries considerable valuation risk if growth does not accelerate as expected. Could this premium be justified by future performance, or does it leave little room for disappointment?

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

Build Your Own Power Integrations Narrative

If the consensus doesn’t match your perspective or you like to dig into the numbers yourself, you can build your own interpretation of the story. Get started in just a few 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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