Power Integrations (POWI) Stock Forecast & Price Target

Power Integrations is viewed positively because its 2Q results beat expectations, with revenue of $108.3M and non-GAAP EPS of $0.25, while gross margin expanded to 55.1% and operating margin to 17.1%, showing improving earnings leverage. The business is benefiting from a cyclical recovery led by industrial demand, which was up 14% QoQ and is supported by better inventory levels, with internal inventory down to 265 days and channel inventory at 7.3 weeks. Long term, the company’s differentiated high-voltage GaN portfolio, strong design traction in auto and AI data center applications, and a debt-free balance sheet with about $250M in cash support a multi-year growth inflection.

Power Integrations is exposed to a deteriorating mix and meaningful competitive pressure, as revenue fell from $703M in 2021 to $419M in 2024, with communications driving 58% of the total decline as handset fast chargers left the box. The bullish data-center thesis still depends on reference-design inclusion and aux-socket content rather than booked main-power-path wins, so if NVIDIA exclusion occurs or competitors close the 1250V/1700V GaN gap, the expected uplift to FY28 EPS would be far less certain. Around 50% of revenue remains tied to consumer appliances and communications, leaving earnings vulnerable to weak housing/appliance demand, while China and Hong Kong concentration and InnoScience’s lower-cost 200mm GaN ecosystem further cap margin and multiple expansion.