Semiconductor designer Power Integrations (NASDAQ: POWI) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 15.1% year on year to $105.5 million. Its non-GAAP EPS of $0.31 per share was 8.9% above analysts’ consensus estimates.
Is now the time to buy POWI? Find out in our full research report (it’s free).
Power Integrations (POWI) Q1 CY2025 Highlights:
- Revenue: $105.5 million (15.1% year-on-year growth)
- Adjusted EPS: $0.31 vs analyst estimates of $0.28 (8.9% beat)
- Adjusted Operating Income: $15.55 million vs analyst estimates of $13.67 million (14.7% margin, 13.8% beat)
- Revenue Guidance for Q2 CY2025 is $115 million at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 6.4%, up from 0.5% in the same quarter last year
- Inventory Days Outstanding: 325, up from 314 in the previous quarter
- Market Capitalization: $2.87 billion
StockStory’s Take
Power Integrations’ first quarter results were shaped by growth across each of its end markets, with management highlighting particular strength in the Consumer and Computer categories. CEO Balu Balakrishnan pointed to robust appliance sales and air conditioning demand, along with notable design wins in TVs and game consoles, as contributors to the Consumer segment’s performance. In the Computer segment, he emphasized the adoption of GaN (gallium nitride) products for high-density server applications supporting artificial intelligence workloads. The company also attributed some of the quarter’s outperformance in Consumer to appliance shipments being pulled forward ahead of anticipated tariffs, referencing commentary from a major appliance customer.
Looking ahead, Power Integrations expects second quarter revenue growth to be driven by continued strength in Industrial, Computer, and Communications categories, while anticipating a normalization in Consumer after the tariff-related pull-forward. Management cautioned that the outlook for the rest of the year will depend heavily on evolving trade policy, with Balakrishnan stating, “the outlook for the second half of the year is highly dependent on the course of trade policy, and we would not expect to be immune from any reduction in end demand related to tariffs.” The company remains focused on leveraging long-term trends like energy efficiency and electrification, while noting that a favorable outcome on tariffs could prompt inventory replenishment and additional upside.
Key Insights from Management’s Remarks
Management attributed quarterly growth to a mix of end-market strength, new design wins, and external factors like tariff-related demand shifts, while emphasizing the durability of ongoing efficiency and electrification trends.
-
Appliance demand and tariff pull-forward: The Consumer segment benefited from higher appliance and air conditioning sales, with some demand pulled forward as U.S. customers accelerated shipments ahead of tariffs. Management estimated this effect accounted for several million dollars in additional revenue.
-
AI-driven server growth: The Computer category saw increased adoption of Power Integrations’ GaN components for servers, particularly those designed for artificial intelligence applications that require higher power density and efficiency.
-
Industrial market momentum: Growth in the Industrial segment was underpinned by high-voltage design wins in DC transmission, renewables, and electric locomotives, especially in India. The company added new locomotive and metering projects, positioning itself for sustained expansion in these areas.
-
Automotive design wins expanding: Power Integrations reported its first high-voltage GaN design win in automotive for a U.S. electric vehicle customer, as well as new production shipments to Japanese and European automakers. These initiatives are expected to diversify future revenue streams.
-
Inventory and channel health: Channel inventories remained at normal levels, with Consumer inventories below average. Management said this should help cushion any negative effects from demand fluctuations or trade policy changes in upcoming quarters.
Drivers of Future Performance
Management anticipates that growth in Industrial, Computer, and Communications segments, combined with ongoing design wins and evolving trade policy, will drive near-term performance and shape the outlook for the rest of the year.
-
Industrial and automotive ramp: The company expects Industrial to be its fastest-growing segment in 2025, supported by new high-voltage projects in transmission, renewables, and further automotive design wins in the U.S., Japan, and Europe.
-
Consumer normalization post-tariff: After a first quarter boost from tariff-related shipment timing in appliances, management predicts a sequential decline in Consumer revenues but sees a return to typical seasonal patterns by the second half of the year, assuming stable trade conditions.
-
Trade policy uncertainty: Management highlighted that changes in global trade policy remain a significant risk factor for revenue and demand in the second half of 2025. However, low channel inventory levels could soften the impact of any adverse policy developments.
Catalysts in Upcoming Quarters
Over the coming quarters, the StockStory team will be watching (1) progress in ramping high-voltage industrial and automotive design wins, (2) the impact of trade policy developments on demand and inventory management, and (3) ongoing adoption of GaN products in AI-related server applications. Execution in these areas will be critical to sustaining growth and navigating external risks.
Power Integrations currently trades at a forward P/E ratio of 29.6×. In the wake of earnings, is it a buy or sell? See for yourself in our full research report (it’s free).
Stocks That Trumped Tariffs
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
