What Happened?
Shares of semiconductor designer Power Integrations (NASDAQ: POWI) fell 3.1% in the morning session as the stock fell amid broader weakness in the semiconductor sector after industry bellwether Texas Instruments signaled softer demand and issued a cautious outlook. Texas Instruments, a key chipmaker for various industries, sparked concern after it provided a weaker-than-expected forecast for the remainder of the year. Analysts on the company's earnings call noted a "tone shift" from executives regarding the semiconductor recovery cycle compared to previous quarters. The change in messaging from a major industry player created uncertainty about the health of the overall chip market. This cautious sentiment appeared to weigh on related stocks, including Power Integrations, as investors reassessed the sector's near-term growth prospects.
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What Is The Market Telling Us
Power Integrations’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates 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 2 months ago when the stock dropped 7.4% on the news that the company reported weak first quarter 2025 results, its inventory levels increased and revenue was only in-line with expectations. The result revealed muted sequential growth, as sales edged up just slightly from the prior quarter despite growing 15% year-over-year.
Looking ahead, revenue guidance for next quarter was just in line as well. On the other hand, Power Integrations beat analysts' adjusted operating income and EPS expectations this quarter. Still, we think this was a mixed quarter. The market seemed to be hoping for more.
Power Integrations is down 12.6% since the beginning of the year, and at $53.11 per share, it is trading 28.8% below its 52-week high of $74.58 from July 2024. Investors who bought $1,000 worth of Power Integrations’s shares 5 years ago would now be looking at an investment worth $894.64.
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