POWER INTEGRATIONS, INC. (POWI): what the price assumes
In the published model solve dated 2026-Q2, anchored at $61.96, POWER INTEGRATIONS, INC. (POWI) is priced for today's economics sustained for ~17.0 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.
Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/POWI
Headline
| Field | Value |
|---|---|
| Ticker | POWI |
| Company | POWER INTEGRATIONS, INC. |
| Current price | $61.96/sh |
| Composition | Americas 5% / EMEA - Germany 6% / EMEA - Other 5% / APAC - Hong Kong/China 55% / APAC - India 5% / APAC - Korea 9% / APAC - Taiwan 6% / APAC - Other 8% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 42.6% |
| Operating margin (mid-cycle) | 13.4% |
| Margin expansion (value-band) | +29.2pp |
| Trailing margin (depressed year) | 1.1% |
| Must persist for | 17.0y |
| Multiple paid | 54x mid-cycle operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 12.2% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.5 years.
Reconcile: at the x-ray's 9.3% required return this reads ~10.4 years; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | -0.20σ |
| sustained it ~10 years at this level | 15% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 13.09x | 2 | expensive |
| Earnings | 5.58x | 4 | expensive |
| Relative | 5.46x | 3 | expensive |
| Growth | 1.39x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=12)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $25.25 | 2.45x | yes | FCF base $0.1B, growth 3% (input: historical growth), terminal g 3.1%, WACC 9.2%, 5yr projection |
| DCF Exit Multiple | Growth | $51.00 | 1.21x | yes | Exit EV/EBITDA: 301.3x / 303.3x / 305.3x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $11.34 | 5.46x | yes | P/E 48.4x (blended: static sector reference 22x + trailing (TTM) 209x), scenarios: 40.6x / 48.4x / 56.2x (bear / base = reference held flat / bull), EV/EBITDA 35.2x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $3.21 | 19.30x | yes | BV/sh $12.02, ROE (TTM) 2.5%, ke 9.3% |
| Two-Stage Excess Return | Asset | $1.85 | 33.49x | yes | 5yr excess ROE then converge to ke=9.3% (excluded from median) |
| Discounted Future Market Cap | Growth | $44.46 | 1.39x | yes | Rev $0.4B, growth 3% (input: historical growth; tapered), Terminal P/S: 6.5x / 7.8x / 9.0x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $13.21 | 4.69x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.08B × (1−16%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $1.36 | 45.56x | yes | BV $12.02 + 5yr PV of (ROE (TTM) 2.5% − Kₑ 9.3%) × BV; BV grows 1.6%/yr (excluded from median) |
| Graham Number | Asset | $9.01 | 6.88x | yes | √(22.5 × EPS $0.30 × BVPS $12.02) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $3.80 | 16.31x | yes | EBITDA $0.01B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $16.91 | 3.66x | yes | FCF $84.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $9.58 | 6.47x | yes | SBC-adj FCF $0.05B (FCF $0.08B − SBC $0.04B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $0.25 | 247.84x | yes | EPS $0.30 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $0.25 | 247.84x | yes | BV $12.02 × (ROIC 0.2% / WACC 9.2%) (excluded from median) |
| P/Sales Sector | Relative | $39.94 | 1.55x | yes | Revenue $0.45B × sector P/S 5.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $3.24 | 19.12x | yes | EPS $0.30 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $257.2m |
| Net debt / NOPAT (after-tax) | -5.12x (net cash) |
| Net debt / operating income (pre-tax) | -4.31x (net cash) |
| Share count CAGR (buyback) | -1.8% |
| Burning cash | no |
Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 13.4%); the trailing year was depressed.
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Power Integrations is an asset-light power-semiconductor designer with no debt and about $257 million of net cash. Through the cycle it earns roughly a 13% operating margin, but the trailing quarter sits near 1% because the chip cycle is in a trough.
- At $87.23 no valuation family reaches the price. On normalized mid-cycle earnings the market is paying about 77 times operating income, implying growth held near its ceiling for roughly two decades. The price is a bet on durability beyond what standard frames support.
- The hinge is GaN. The company's PowiGaN platform aimed at high-voltage AI data center and automotive power is the growth story, but it competes head-on with Navitas, Innoscience, Infineon, and others in a market the filing calls intensely competitive.
Bull Case
The case for Power Integrations starts with the shape of its returns. This is an asset-light chip designer that outsources manufacturing, carries no debt, and sits on about $257 million of net cash, and across the cycle it converts roughly 13% of revenue into operating profit. That margin profile, paired with a long history of buying back stock, is the signature of a business with real pricing power in a niche it helped create: high-voltage power conversion integrated circuits. The company's products replace bulkier, less efficient discrete and hybrid solutions, and the value proposition is integration, the thing a commodity component supplier cannot easily copy.
The growth vector is gallium nitride, and the timing is improving. Power Integrations describes itself as a leader in high-power GaN, with a 1250-volt and 1700-volt platform aimed at the 800-volt data center architectures that AI compute is driving, and it is collaborating with NVIDIA to accelerate the shift to 800-volt power and megawatt-scale racks. Auxiliary power and solid-state transformer designs are the nearer-term opportunities, while the higher-voltage GaN tied to next-generation racks is a couple of years out. That is a genuine secular tailwind layered on top of a cyclical recovery: first-quarter 2026 revenue rose about 3% year over year to $108.3 million, with industrial revenue up 23%, and management guided second-quarter revenue to $115 million to $120 million.
The valuation read has to be framed correctly. The trailing earnings are depressed by the trough, so a trailing multiple overstates the richness; on the company's own through-the-cycle margins the picture is a high-quality compounder priced for a recovery and a GaN ramp. The balance sheet removes the financial risk that usually accompanies a cyclical, and the no-debt, net-cash position means the company can fund research and buy back shares through the downturn without dilution. If the data center GaN opportunity converts even partway, the normalized earnings base steps up and the multiple the market is paying becomes far more defensible.
Bear Case
The competitive threat is the bear case, and it is specific. Gallium nitride is the highest-profile growth market in power semiconductors, which is exactly why everyone is crowding into it. Navitas, partnered with GlobalFoundries to scale U.S. GaN for AI data centers, Innoscience, which holds the largest share of the power GaN device market, and the large analog incumbents are all targeting the same 800-volt data center and automotive sockets Power Integrations is chasing. The company's own filing is blunt about the dynamic, warning that the "high-voltage power supply industry is intensely competitive and characterized by significant price sensitivity" and that its products "face competition from alternative technologies" (FY2025 10-K). It names rivals directly, citing alternatives "from such companies as Infineon, Mitsubishi Electric, Fuji Electric" and motor-driver competition from "ON Semiconductor, Infineon, STMicroelectronics" (FY2025 10-K). A leadership position in a market this contested is not a guarantee of leadership economics.
The valuation is the second problem, and it is severe. No valuation family reaches the $87.23 price (June 27, 2026), even using normalized mid-cycle earnings. At about 77 times normalized operating income, the price implies growth held near its self-funding ceiling for roughly 21 years, and only about 15% of comparable fast-growers have sustained that pace for even ten years. The price is not asking whether the GaN ramp happens; it is asking whether it happens, durably, for two decades. Either the ramp disappoints, or competition compresses the margins it produces, and the gap between the price and where the methods land, around $11 to $18, is enormous.
The cyclicality is the third caution. The trailing operating margin near 1% is a reminder that this business swings hard with the chip cycle, and the recovery is early. Consumer end markets remain soft, and the high-voltage data center GaN opportunity that anchors the growth story is still a couple of years from volume. A delayed recovery, a slower AI power transition, or a price war in GaN would each strand a price that already assumes a long, clean compounding runway. The balance sheet is a comfort, but it does not make the implied-duration bet any less demanding.
Valuation
Because trailing earnings are depressed by the cycle, the valuation uses the company's own through-the-cycle margins on current revenue rather than the trough quarter. Even on that normalized basis, no valuation family reaches the $87.23 price: it reads rich on assets, earnings power, peer multiples, and even forward growth. The asset-based and earnings-power methods land far below, in the low teens, while the more generous forward-growth methods still fall short. A reasonable-growth re-pricing puts the base near $14 with a band from roughly $13 to $18, and that reliability is low precisely because the inputs are cyclically distorted.
Inverting the price into the assumption it embeds, the market is paying about 77 times normalized mid-cycle operating income, which implies operating growth held near its self-funding ceiling for about 21 years at a 12.4% cost of capital. The sensitivity is meaningful: each one-point change in the cost of capital moves the implied horizon by roughly 2.9 years. Against history, only about 15% of comparable fast-growers sustained this pace for even ten years, which puts the implied bet at the elevated end of the scale.
The honest conclusion is that this is priced as a GaN growth option, not as a current-earnings business. The quality is real, the balance sheet removes financial risk, and the cyclical recovery is underway, but the price embeds a long and uninterrupted GaN ramp that competition makes far from certain. An investor here is paying up for durability that the standard methods cannot underwrite, and the cushion if the ramp slips is thin.
Catalysts
The dominant catalyst is the GaN data center ramp. Power Integrations has detailed 1250-volt and 1700-volt PowiGaN technology for next-generation 800-volt DC AI data centers and is collaborating with NVIDIA to accelerate the transition to 800-volt power and megawatt-scale racks. Management frames auxiliary power and solid-state transformer designs as nearer-term, with the higher-voltage GaN tied to 800-volt architectures a couple of years out. Each design win, qualification, or partnership announcement in that pipeline is a discrete event the market reprices around, as the roughly 20% move on the NVIDIA news showed.
The cyclical recovery is the second driver. First-quarter 2026 revenue rose about 3% year over year and 5% sequentially to $108.3 million, with GAAP EPS of $0.06 and non-GAAP EPS of $0.25, and industrial revenue up 23% year over year leading the rebound. Management guided second-quarter revenue to $115 million to $120 million, bracketing consensus. Continued sequential revenue growth and a recovery in gross and operating margin off the trough would confirm the cycle has turned.
The risk to watch is competition in GaN, where Navitas, Innoscience, Infineon, and others are all pushing into the same high-power sockets. Analyst sentiment is constructive but the price targets span a wide range, from the mid-$50s to the mid-$90s, reflecting how much of the value hinges on the GaN ramp converting. Power Integrations also pays a modest dividend and continues to repurchase shares, supported by its net-cash balance sheet.
Sources:
- https://www.stocktitan.net/sec-filings/POWI/8-k-power-integrations-inc-reports-material-event-fb0ac2a2262a.html
- https://www.businesswire.com/news/home/20251013503136/en/Power-Integrations-Details-1250-V-and-1700-V-PowiGaN-Technology-for-Next-Generation-800-VDC-AI-Data-Centers
- https://simplywall.st/stocks/us/semiconductors/nasdaq-powi/power-integrations/news/why-power-integrations-powi-is-up-54-after-announcing-nvidia
- https://stockanalysis.com/stocks/powi/forecast/
- https://www.benzinga.com/quote/POWI/analyst-ratings
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- ALGM (ALLEGRO MICROSYSTEMS, INC.)
- FY2025 10-K: …and profitability. We participate in intensely competitive end markets in the global semiconductor industry. Our competitive landscape includes rapid technological change in product design and manufacturing, continuous declines in ASPs, and customers who make purchase decisions based on a mix of factors of varying…
- FY2025 10-K: …semiconductor wafer suppliers, or estimate our customers' demand could have a material adverse effect on our net sales, business, financial condition and results of operations. Shifts in our product mix, customer mix or channel mix may result in declines in gross margin. Gross margins on individual products typically…
- MPWR (MONOLITHIC POWER SYSTEMS INC)
- FY2025 10-K: …partners utilize prior to shipping to our customers. The manufacturing facilities we utilize in Asia enable us to benefit from shorter manufacturing cycle times and lower labor and overhead costs. We have expanded our product testing capabilities in these facilities and are able to take advantage of the rich pool of…
- FY2025 10-K: …of such products. We consider our primary competitors to include Analog Devices, Infineon Technologies, NXP Semiconductors, ON Semiconductor, Power Integrations, Renesas Electronics, ROHM Semiconductor, Semtech, STMicroelectronics and Texas Instruments. 9 Table of Contents We expect continued competition from…
- SLAB (SILICON LABORATORIES INC.)
- FY2025 10-K: …in our backlog are subject to changes in delivery schedules or cancellation at the option of the purchaser, typically without penalty. Our backlog may fluctuate significantly depending upon customer order patterns which may, in turn, vary considerably based on rapidly changing business circumstances. Accordingly, we…
- FY2025 10-K: …condition • Our business, financial condition, and results of operations could be materially and adversely affected by global or industry-specific shortages of memory components or other key components necessary for our customers' products • Competition within the numerous markets we target may reduce sales of our…
- SYNA (SYNAPTICS INCORPORATED)
- FY2025 10-K: …competitive solutions, and ongoing technology shifts. If these markets experience slower than expected growth or if demand for our solutions weakens, our revenue and profitability could be materially impacted. Changes to international trade policies, export controls, and foreign operations expose us to legal,…
- FY2025 10-K: , including China. Our current operations suggest limited tariff exposure given our current import and export practices. However, some of our customers and suppliers may be impacted by evolving tariff regimes depending on their own supply chain strategies and sourcing locations. We continue to monitor for any…
- SMTC (SEMTECH CORP)
- FY2025 10-K: …and, in certain cases, our ability to persuade customers to design these new products into their applications. Semiconductor Industry The semiconductor industry is characterized by decreasing average unit selling prices over the life of a product and as volumes increase. However, price decreases can sometimes be…
- FY2025 10-K: …cycles that characterize the industry. The timing, length and volatility of these cycles are difficult to predict. The semiconductor industry has historically been cyclical due to sudden changes in demand, the amount of manufacturing capacity and changes in the technology employed in semiconductors. The rate of…
- CRUS (Cirrus Logic, Inc.)
- FY2025 10-K: …deposits or if a depository institution is subject to other adverse conditions in the financial or credit markets, there is no guarantee that we have access to such uninsured deposits, which could restrict access to our cash or cash equivalents and could adversely impact our operating liquidity, financial condition,…
- FY2025 10-K: …ability to compete effectively and to expand our business will depend on our ability to continue to recruit key engineering talent, execute on new product developments, partner with customers to create compelling products for their applications and provide cost efficient versions of existing products. We compete with…
- MCHP (MICROCHIP TECHNOLOGY INCORPORATED)
- FY2025 10-K: …balances of the Company's receivables. Note 3 . Geographic and Segment Information The Company's business is made up of two operating segments, semiconductor products and technology licensing. These segments represent management's view of the business for which separate financial information is available and…
- FY2025 10-K: …the Company's manufacturing capabilities to help ensure the efficiency of the Company's operations and fulfillment of customer requirements. The technology licensing segment includes sales and licensing of the Company's intellectual property. The CODM uses segment gross profit for evaluating each segment's…
- ADI (ANALOG DEVICES INC)
- FY2025 10-K: …industry, and we expect this competition to increase in the future, including from companies located outside of the United States. Competition is generally based on innovation, design, quality and reliability of products, product performance, features and functionality, product pricing, availability and capacity,…
- FY2025 10-K: …can benefit from such government incentives and we cannot, it could strengthen our competitors' relative position and have a material adverse effect on our reputation and business. Existing or new competitors may develop products or technologies that more effectively address the demands of our customers and markets…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.