Home > Comparison > Technology > LRCX vs MPWR
The strategic rivalry between Lam Research Corporation and Monolithic Power Systems, Inc. shapes the semiconductor industry’s evolution. Lam Research operates as a capital-intensive leader in semiconductor fabrication equipment, while Monolithic Power Systems excels as a high-margin provider of power electronics solutions. This analysis pits equipment manufacturing scale against specialized IC innovation. I will determine which company’s trajectory offers superior risk-adjusted returns for a diversified portfolio navigating technology’s dynamic landscape.
Table of contents
Companies Overview
Lam Research Corporation and Monolithic Power Systems, Inc. represent key players shaping semiconductor technology’s evolving landscape.
Lam Research Corporation: Semiconductor Equipment Innovator
Lam Research Corporation dominates semiconductor fabrication equipment, generating revenue by designing and servicing advanced wafer processing tools. Its 2026 strategy centers on expanding plasma and atomic layer deposition technologies to enhance chip manufacturing precision. The company’s competitive advantage lies in its extensive product portfolio serving global semiconductor fabricators.
Monolithic Power Systems, Inc.: Power Electronics Specialist
Monolithic Power Systems focuses on semiconductor-based power solutions, primarily through DC-to-DC integrated circuits for diverse electronics markets. In 2026, it emphasizes innovation in energy-efficient power management ICs for computing and automotive sectors. Its core business thrives on enabling next-gen power control for OEMs worldwide.
Strategic Collision: Similarities & Divergences
Both firms operate within semiconductors but pursue distinct paths: Lam Research invests in capital-intensive fabrication tools, while Monolithic targets scalable power IC solutions. They compete indirectly across the semiconductor value chain, with Lam focusing on manufacturing infrastructure and Monolithic on end-device power efficiency. Their investment profiles diverge by capital intensity and market exposure, reflecting different risk and growth dynamics.
Income Statement Comparison
This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | Lam Research Corporation (LRCX) | Monolithic Power Systems, Inc. (MPWR) |
|---|---|---|
| Revenue | 18.4B | 2.21B |
| Cost of Revenue | 9.46B | 986M |
| Operating Expenses | 3.08B | 682M |
| Gross Profit | 8.98B | 1.22B |
| EBITDA | 6.34B | 576M |
| EBIT | 5.96B | 539M |
| Interest Expense | 178M | 0 |
| Net Income | 5.36B | 1.79B |
| EPS | 4.17 | 36.76 |
| Fiscal Year | 2025 | 2024 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals how each company’s financial engine drives efficiency and profitability in a competitive market.
Lam Research Corporation Analysis
Lam Research grows revenue steadily, reaching $18.4B in 2025 with net income climbing to $5.36B. Its gross margin holds strong at 48.7%, and net margin at 29.1%, both favorable. The 2025 fiscal year shows robust momentum with a 23.7% revenue increase and a 13.2% net margin expansion, underscoring operational efficiency and margin strength.
Monolithic Power Systems, Inc. Analysis
Monolithic Power expands revenue impressively, hitting $2.21B in 2024 and surging net income to $1.79B. It boasts an exceptional net margin of 81.0% and a superior gross margin of 55.3%. Despite operating expenses growing faster than revenue, net income and EPS explode by 245% and 318% respectively in 2024, reflecting powerful profitability gains and high capital efficiency.
Margin Power vs. Revenue Scale
Monolithic Power delivers extraordinary net margin and explosive earnings growth, outpacing Lam Research in profitability leaps. However, Lam Research commands a far larger revenue base and maintains consistent margin expansion. Investors seeking high-margin, high-growth profiles may favor Monolithic, while those prioritizing scale and steady margin improvement may lean toward Lam Research.
Financial Ratios Comparison
These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of the companies compared:
| Ratios | Lam Research Corporation (LRCX) | Monolithic Power Systems, Inc. (MPWR) |
|---|---|---|
| ROE | 54.3% | 56.8% |
| ROIC | 34.0% | 16.2% |
| P/E | 23.4 | 16.1 |
| P/B | 12.7 | 9.1 |
| Current Ratio | 2.21 | 5.31 |
| Quick Ratio | 1.55 | 3.89 |
| D/E | 0.48 | 0.005 |
| Debt-to-Assets | 22.3% | 0.44% |
| Interest Coverage | 33.1 | 0 |
| Asset Turnover | 0.86 | 0.61 |
| Fixed Asset Turnover | 7.59 | 4.17 |
| Payout ratio | 21.5% | 13.5% |
| Dividend yield | 0.92% | 0.84% |
| Fiscal Year | 2025 | 2024 |
Efficiency & Valuation Duel: The Vital Signs
Financial ratios act as a company’s DNA, uncovering hidden risks and operational strengths essential for investment decisions.
Lam Research Corporation
Lam Research delivers robust profitability with a 54.33% ROE and a strong 29.06% net margin, signaling operational excellence. Its valuation appears fair, with a neutral P/E of 23.36, though the high price-to-book at 12.69 raises caution. The modest 0.92% dividend yield contrasts with significant reinvestment in R&D, fueling growth.
Monolithic Power Systems, Inc.
Monolithic Power posts an impressive 80.95% net margin and a 56.8% ROE, reflecting efficiency and strong shareholder value creation. Its P/E ratio of 16.09 suggests a reasonable valuation despite an unfavorable price-to-book of 9.14. The company supports growth through heavy R&D spending rather than dividends, signaling aggressive capital allocation.
Balanced Profitability Meets Valuation Discipline
Lam Research offers a higher return on invested capital and a balanced risk profile, while Monolithic Power boasts superior margins but a stretched balance sheet. Investors seeking operational safety may prefer Lam’s stability; those favoring growth might lean toward Monolithic’s efficiency and reinvestment focus.
Which one offers the Superior Shareholder Reward?
I see Lam Research (LRCX) and Monolithic Power Systems (MPWR) pursue distinct distribution strategies. LRCX offers a modest dividend yield near 0.9% with a stable payout ratio around 21-27%. Its buybacks are steady but less aggressive. MPWR yields slightly less (~0.8%) but deploys a hefty buyback program, with free cash flow reinvested heavily in growth. MPWR’s payout ratio varies more, nearing 43% in 2023, signaling less conservative dividends. LRCX’s dividend is fully covered by free cash flow, ensuring sustainability. MPWR’s capital returns pivot on growth and share repurchases, which historically favors total returns in tech cycles. I judge MPWR’s aggressive buybacks and reinvestment strategy offer superior long-term shareholder reward in 2026, despite lower immediate yield.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of Lam Research Corporation and Monolithic Power Systems, highlighting their financial strengths and vulnerabilities:
Both firms share strong operational efficiency, scoring 5 in ROE and ROA, signaling superior asset and equity utilization. Lam Research shows a weaker debt-to-equity score (2) versus Monolithic’s stronger balance sheet (4), indicating higher leverage risk for Lam. Valuation metrics (PE/PB) are similarly unfavorable for both, but Monolithic edges out with a better overall score (4 vs. 3), reflecting a more balanced financial profile. Lam relies heavily on operational prowess, while Monolithic leverages financial stability.
Bankruptcy Risk: Solvency Showdown
Lam Research’s Altman Z-Score of 21.18 versus Monolithic’s 54.87 confirms both firms are in the safe zone, with Monolithic holding a substantial solvency margin over Lam, signaling robust long-term survival prospects:
Financial Health: Quality of Operations
Lam Research scores an 8 on the Piotroski F-Score, indicating very strong financial health and operational quality. Monolithic’s 4 reflects average health, raising caution for internal metric red flags and weaker fundamentals relative to Lam:
How are the two companies positioned?
This section dissects Lam Research and Monolithic Power Systems’ operational DNA by comparing their revenue by segment and internal dynamics. The goal is to confront their economic moats to reveal which model offers the most resilient competitive edge today.
Revenue Segmentation: The Strategic Mix
This comparison dissects how Lam Research Corporation and Monolithic Power Systems diversify their income streams and where their primary sector bets lie:
Lam Research pivots on two robust segments: Systems at $11.5B and Customer Support at $6.9B in 2025, showing a balanced revenue mix. Monolithic Power, however, dwarfs in DC To DC Products at $1.7B, anchoring its revenue while Lighting Control lags at $102M. Lam’s diversification reduces concentration risk, whereas Monolithic’s heavy reliance on DC To DC signals potential vulnerability but also a focused market moat.
Strengths and Weaknesses Comparison
This table compares the Strengths and Weaknesses of Lam Research Corporation and Monolithic Power Systems, Inc.:
Lam Research Corporation Strengths
- Strong profitability with 29.06% net margin and 54.33% ROE
- Favorable liquidity ratios with current ratio 2.21 and quick ratio 1.55
- Low debt levels with 0.48 debt-to-equity and 22.28% debt-to-assets
- High fixed asset turnover at 7.59 indicating efficient asset use
- Broad global presence including China, Korea, Taiwan, and US
Monolithic Power Systems, Inc. Strengths
- Exceptional net margin at 80.95% and strong ROE at 56.8%
- Very low debt with 0.01 debt-to-equity and minimal debt-to-assets
- High interest coverage ratio with infinite coverage
- Solid quick ratio of 3.89 supporting short-term liquidity
- Established presence in China, Taiwan, Korea, and expanding US market
Lam Research Corporation Weaknesses
- Weighted average cost of capital (WACC) at 12.09% exceeds typical benchmarks
- Price-to-book ratio of 12.69 signals potentially high valuation risk
- Dividend yield low at 0.92% may deter income-focused investors
- Asset turnover only neutral at 0.86, suggesting room for improvement
Monolithic Power Systems, Inc. Weaknesses
- WACC at 10.7% remains unfavorable relative to industry norms
- Current ratio of 5.31 classified unfavorable, indicating possible inefficient capital use
- Price-to-book at 9.14 also unfavorable, signaling valuation caution
- Dividend yield low at 0.84%, limiting income appeal
Both companies demonstrate solid profitability and low leverage, supporting operational resilience. Lam Research shows stronger asset utilization, while Monolithic Power excels in net margin. Each faces valuation and capital efficiency risks that require strategic attention.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only reliable shield protecting long-term profits from relentless competition erosion:
Lam Research Corporation: Technology-Driven Scale Moat
Lam Research’s moat stems from its advanced semiconductor equipment and high ROIC near 22%, reflecting efficient capital use and margin stability. Expansion in Asia-Pacific markets in 2026 could deepen this advantage.
Monolithic Power Systems, Inc.: Innovation-Fueled Niche Moat
Monolithic Power’s moat relies on specialized power management ICs with a growing ROIC trend above 5.5%. Its narrower scale contrasts Lam’s but technological innovation promises further margin gains and market penetration.
Scale Dominance vs. Innovation Niche: Who Holds the Moat Edge?
Lam Research commands a wider moat through superior capital returns and global footprint. Its scale and product breadth better defend market share than Monolithic’s focused but smaller competitive edge.
Which stock offers better returns?
Over the past year, both stocks showed strong gains with Lam Research accelerating sharply after a low base, while Monolithic Power Systems maintained steady upward momentum.
Trend Comparison
Lam Research’s stock rose 161% over the last 12 months, exhibiting a bullish trend with accelerating gains and a high of 237.5 after bottoming at 59.09.
Monolithic Power Systems increased 71% over the same period, also bullish with acceleration, but showed higher volatility and a peak at 1173.22 from a 477.39 low.
Lam Research outperformed Monolithic Power Systems by a wide margin in total return, delivering stronger price appreciation and more pronounced acceleration.
Target Prices
Analysts present a bullish consensus for Lam Research Corporation and Monolithic Power Systems, Inc.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| Lam Research Corporation | 127 | 325 | 266.76 |
| Monolithic Power Systems, Inc. | 1025 | 1375 | 1214.29 |
The consensus target for Lam Research stands roughly 12% above the current price of $237.5, indicating moderate upside. Monolithic Power’s target is near 3.5% above its recent $1173, suggesting cautious optimism.
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How do institutions grade them?
Lam Research Corporation Grades
The following table summarizes recent institutional grades for Lam Research Corporation:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | Maintain | Buy | 2026-01-29 |
| Wells Fargo | Maintain | Overweight | 2026-01-29 |
| JP Morgan | Maintain | Overweight | 2026-01-29 |
| RBC Capital | Maintain | Outperform | 2026-01-29 |
| Citigroup | Maintain | Buy | 2026-01-29 |
| Stifel | Maintain | Buy | 2026-01-29 |
| Morgan Stanley | Maintain | Equal Weight | 2026-01-29 |
| Needham | Maintain | Buy | 2026-01-29 |
| Susquehanna | Maintain | Positive | 2026-01-29 |
| Goldman Sachs | Maintain | Buy | 2026-01-29 |
Monolithic Power Systems, Inc. Grades
Below are recent institutional grades for Monolithic Power Systems, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Wells Fargo | Maintain | Overweight | 2026-01-26 |
| Wells Fargo | Upgrade | Overweight | 2026-01-15 |
| Truist Securities | Maintain | Buy | 2025-12-19 |
| Citigroup | Maintain | Buy | 2025-11-03 |
| TD Cowen | Maintain | Buy | 2025-10-31 |
| Keybanc | Maintain | Overweight | 2025-10-31 |
| Rosenblatt | Maintain | Neutral | 2025-10-31 |
| Keybanc | Maintain | Overweight | 2025-10-23 |
| Wells Fargo | Maintain | Equal Weight | 2025-10-20 |
| Stifel | Maintain | Buy | 2025-10-17 |
Which company has the best grades?
Lam Research consistently holds strong buy and outperform ratings from top firms, signaling high institutional confidence. Monolithic Power Systems also receives mostly buy and overweight grades but includes a neutral rating. Lam Research’s broader consensus of top-tier ratings suggests stronger market endorsement, potentially impacting investor perception positively.
Risks specific to each company
The following categories identify the critical pressure points and systemic threats facing both firms in the 2026 market environment:
1. Market & Competition
Lam Research Corporation
- Operates in highly cyclical semiconductor equipment sector with strong global competitors.
Monolithic Power Systems, Inc.
- Focuses on power ICs with diversified end-markets but faces intense innovation pressure.
2. Capital Structure & Debt
Lam Research Corporation
- Moderate leverage (D/E 0.48) with strong interest coverage (33.43x) signals financial stability.
Monolithic Power Systems, Inc.
- Minimal debt (D/E 0.01) reduces financial risk but may limit leverage benefits.
3. Stock Volatility
Lam Research Corporation
- High beta (1.779) indicates elevated sensitivity to market swings.
Monolithic Power Systems, Inc.
- Lower beta (1.456) suggests relatively less volatility but still above market average.
4. Regulatory & Legal
Lam Research Corporation
- Exposure to export controls and IP regulations across multiple jurisdictions.
Monolithic Power Systems, Inc.
- Faces compliance risks in automotive and industrial segments with evolving standards.
5. Supply Chain & Operations
Lam Research Corporation
- Complex global supply chain vulnerable to semiconductor shortages and geopolitical tensions.
Monolithic Power Systems, Inc.
- Relies on third-party distributors, increasing operational risks but with some flexibility.
6. ESG & Climate Transition
Lam Research Corporation
- High energy use in manufacturing poses transition risks amid tightening regulations.
Monolithic Power Systems, Inc.
- Smaller footprint but must align with customer sustainability demands in automotive sector.
7. Geopolitical Exposure
Lam Research Corporation
- Significant exposure to China and Asia-Pacific trade tensions.
Monolithic Power Systems, Inc.
- International sales diversified but still affected by US-China technology conflicts.
Which company shows a better risk-adjusted profile?
Lam Research’s most impactful risk is its high market volatility and geopolitical exposure, which could disrupt its supply chain and sales. Monolithic Power Systems faces operational risks from distribution reliance and evolving regulatory demands. Despite these, MPWR’s lower leverage and more stable stock beta suggest a better risk-adjusted profile. Notably, Lam’s beta of 1.779 versus MPWR’s 1.456 underscores Lam’s higher market sensitivity, confirming my concern about cyclical volatility.
Final Verdict: Which stock to choose?
Lam Research’s superpower lies in its efficient capital allocation and robust economic moat. It consistently generates returns far above its cost of capital, signaling durable value creation. The main point of vigilance is its elevated price-to-book ratio, which may temper upside in the near term. This stock fits well within an Aggressive Growth portfolio seeking quality with proven profitability.
Monolithic Power Systems stands out for its strategic moat in power management technology, delivering exceptional net margins and recurrent cash flow. It carries a stronger liquidity buffer and lower financial risk than Lam, offering a safer profile. MPWR suits a GARP (Growth at a Reasonable Price) portfolio, balancing growth potential and capital preservation.
If you prioritize consistent value creation and high return on invested capital, Lam Research is the compelling choice due to its proven capital efficiency and expanding profitability. However, if you seek growth with a cushion of financial safety and a strong margin profile, Monolithic Power Systems offers better stability and an attractive growth trajectory, albeit at a premium valuation.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Lam Research Corporation and Monolithic Power Systems, Inc. to enhance your investment decisions:
