Home > Comparison > Technology > MPWR vs TER
The strategic rivalry between Monolithic Power Systems, Inc. and Teradyne, Inc. shapes the semiconductor industry’s evolution. Monolithic Power excels as a specialized designer of power electronics ICs, while Teradyne leads with automated test equipment and industrial automation solutions. This duel highlights a contrast between niche innovation and broad technological integration. This analysis aims to reveal which company presents the superior risk-adjusted opportunity for a diversified portfolio in technology.
Table of contents
Companies Overview
Monolithic Power Systems and Teradyne stand as pivotal players in the semiconductor sector, shaping technology’s backbone.
Monolithic Power Systems, Inc.: Power Electronics Innovator
Monolithic Power Systems serves the semiconductor-based power electronics niche, generating revenue from DC-to-DC integrated circuits. These chips convert and regulate voltages across diverse applications, including computing, automotive, and consumer electronics. In 2026, the company emphasizes expanding its footprint in lighting control ICs and enhancing product integration for portable and industrial systems.
Teradyne, Inc.: Automated Test Equipment Leader
Teradyne dominates the automatic test equipment market, earning through semiconductor test systems, industrial automation, and wireless device testing solutions. Its 2026 strategy focuses on broadening industrial automation capabilities and refining test platforms for emerging 5G and IoT technologies, reinforcing its role in semiconductor manufacturing and wireless device quality assurance.
Strategic Collision: Similarities & Divergences
Both companies leverage advanced semiconductor technology but diverge in approach; Monolithic Power Systems targets power management, while Teradyne focuses on testing and automation. Their primary competition lies in serving semiconductor manufacturers with complementary solutions. Investors face distinct profiles: Monolithic offers growth in power integration, Teradyne provides exposure to industrial automation and testing innovation.
Income Statement Comparison
This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | Monolithic Power Systems, Inc. (MPWR) | Teradyne, Inc. (TER) |
|---|---|---|
| Revenue | 2.21B | 2.82B |
| Cost of Revenue | 986M | 1.17B |
| Operating Expenses | 682M | 1.06B |
| Gross Profit | 1.22B | 1.65B |
| EBITDA | 576M | 732M |
| EBIT | 539M | 613M |
| Interest Expense | 0 | 3.59M |
| Net Income | 1.79B | 542M |
| EPS | 36.76 | 3.41 |
| Fiscal Year | 2024 | 2024 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals the true efficiency and momentum behind each company’s financial engine over recent years.
Monolithic Power Systems, Inc. Analysis
MPWR’s revenue rose from $844M in 2020 to $2.2B in 2024, with net income surging nearly 10-fold to $1.79B. Its gross margin holds strong at 55.3%, while net margin impressively soared to 81.0% in 2024. The company’s operating efficiency and EPS growth reflect robust momentum and disciplined cost control.
Teradyne, Inc. Analysis
TER’s revenue jumped sharply to $3.19T in 2025 from $3.15B in 2022, driven by a massive one-year surge. Despite a favorable gross margin of 58.2%, EBIT margin collapsed to zero in 2025, and net margin fell to 17.4%. This volatility signals operational challenges amid rapid scaling, with mixed signals on profitability sustainability.
Margin Power vs. Revenue Scale
MPWR delivers superior margin expansion and consistent bottom-line growth, showcasing operational discipline and high efficiency. TER impresses with explosive revenue scale but struggles with margin compression and EBIT volatility. For investors, MPWR’s profile offers steadier profit growth, while TER’s scale comes with higher execution risk.
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 below:
| Ratios | Monolithic Power Systems, Inc. (MPWR) | Teradyne, Inc. (TER) |
|---|---|---|
| ROE | 56.8% | 19.2% |
| ROIC | 16.2% | 17.2% |
| P/E | 16.1 | 36.9 |
| P/B | 9.14 | 7.11 |
| Current Ratio | 5.31 | 2.91 |
| Quick Ratio | 3.89 | 1.84 |
| D/E | 0.005 | 0.027 |
| Debt-to-Assets | 0.44% | 2.07% |
| Interest Coverage | 0 (no interest expense) | 166x |
| Asset Turnover | 0.61 | 0.76 |
| Fixed Asset Turnover | 4.17 | 4.88 |
| Payout Ratio | 13.5% | 14.1% |
| Dividend Yield | 0.84% | 0.38% |
| Fiscal Year | 2024 | 2024 |
Efficiency & Valuation Duel: The Vital Signs
Financial ratios serve as the company’s DNA, exposing hidden risks and operational strengths that define investment quality.
Monolithic Power Systems, Inc.
MPWR delivers robust profitability with a 56.8% ROE and a stellar 80.95% net margin, signaling operational excellence. The P/E of 16.09 implies a fairly valued stock, though a high PB ratio of 9.14 suggests some premium pricing. Shareholders receive modest dividends, while the firm heavily reinvests in R&D for growth.
Teradyne, Inc.
TER shows solid profitability, with a 19.24% ROE and a 19.23% net margin, reflecting efficient operations. However, its valuation appears stretched, with a P/E of 36.93 and PB of 7.11, raising concerns. Dividend yield stands at 0.38%, complemented by steady investment in R&D to support future growth.
Premium Valuation vs. Operational Safety
MPWR pairs superior profitability with reasonable valuation, offering a balanced risk-reward profile. TER’s high valuation contrasts with lower profitability, suggesting greater risk. Investors favoring operational safety may lean toward MPWR, while those seeking growth potential might consider TER’s profile despite the premium.
Which one offers the Superior Shareholder Reward?
I see Monolithic Power Systems (MPWR) delivers a higher dividend yield of 0.84% versus Teradyne’s (TER) 0.38%. MPWR pays out 13.5% of its FCF as dividends, showing moderate payout discipline. TER’s payout ratio is similar at 14.1%, but its dividend yield trails. MPWR’s buyback intensity is stronger, supporting capital return alongside dividends. TER maintains a conservative dividend with modest buybacks, favoring reinvestment into operations. MPWR’s blend of dividends and share repurchases offers more immediate and sustainable shareholder rewards. I conclude MPWR provides a superior total return profile for 2026 investors.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of Monolithic Power Systems, Inc. and Teradyne, Inc., highlighting their core strengths and vulnerabilities:
Monolithic Power Systems dominates in return on equity (5 vs. 4) and return on assets (5 each), signaling superior profitability and asset efficiency. Both maintain solid debt-to-equity scores (4 each), indicating prudent leverage. Teradyne lags with a weaker overall score (3 vs. 4) and suffers from very unfavorable valuation metrics (P/E 1 vs. 2 and P/B 1 vs. 1). Monolithic Power offers a more balanced profile, while Teradyne relies heavily on asset utilization but struggles with valuation.
Bankruptcy Risk: Solvency Showdown
Monolithic Power’s Altman Z-Score (54.9) exceeds Teradyne’s (19.9), both well within the safe zone, underscoring robust financial stability and negligible bankruptcy risk for either firm in the current cycle:
Financial Health: Quality of Operations
Teradyne’s Piotroski F-Score (5) slightly outperforms Monolithic Power’s (4), both indicating average operational quality. Neither company signals red flags, but cautious monitoring of internal metrics remains prudent:
How are the two companies positioned?
This section dissects MPWR and TER’s operational DNA by comparing their revenue distribution and internal dynamics, including strengths and weaknesses. The goal is to confront their economic moats and identify which model offers the most resilient, sustainable competitive advantage today.
Revenue Segmentation: The Strategic Mix
This visual comparison dissects how Monolithic Power Systems, Inc. and Teradyne, Inc. diversify their income streams and where their primary sector bets lie:
Monolithic Power Systems anchors its revenue with $1.7B from DC To DC Products, while its Lighting Control segment adds a modest $102M. Teradyne shows more diversification, with $2.3B from Product sales and $525M from Services in 2024. MPWR’s reliance on a single dominant segment signals concentration risk but benefits from focused innovation. TER’s balanced mix supports ecosystem lock-in and resilience amid market shifts.
Strengths and Weaknesses Comparison
This table compares the strengths and weaknesses of Monolithic Power Systems, Inc. and Teradyne, Inc.:
MPWR Strengths
- Extremely high net margin of 80.95%
- Strong ROE at 56.8%
- Favorable quick ratio of 3.89
- Minimal debt levels with DE of 0.01
- Significant growth in DC to DC products revenue
- Broad geographic revenue with strong China and Taiwan exposure
TER Strengths
- Solid net margin near 19.23%
- Favorable ROE of 19.24%
- Healthy current and quick ratios (2.91 and 1.84)
- Diverse revenue streams in products and services
- Substantial global footprint including Korea and Taiwan
- Consistent fixed asset turnover at 4.88
MPWR Weaknesses
- Unfavorable weighted average cost of capital at 10.7%
- High price-to-book ratio of 9.14
- Elevated current ratio at 5.31 may indicate inefficient asset use
- Low dividend yield of 0.84%
- Narrow product diversification focused on DC to DC and lighting control
TER Weaknesses
- High price-to-earnings ratio of 36.93 signals expensive valuation
- Unfavorable interest coverage ratio near zero
- Dividend yield low at 0.38%
- Partial data unavailability on ROIC and WACC
- Lower net margin compared to MPWR
Monolithic Power Systems excels in profitability and capital efficiency but shows signs of potential overcapitalization and valuation risk. Teradyne maintains balanced financial health and broader diversification but faces valuation concerns and weak interest coverage. Both companies’ strengths reflect strategic focuses shaped by their market and product scopes.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only true shield protecting long-term profits from competition’s relentless erosion:
Monolithic Power Systems, Inc.: Intangible Assets and Margin Resilience
I see Monolithic’s moat rooted in its proprietary power electronics designs and integrated circuits. This advantage fuels a high ROIC well above WACC, sustaining 55%+ gross margins. Its expanding product lines in automotive and industrial markets deepen this moat in 2026.
Teradyne, Inc.: System Integration and Market Reach
Teradyne’s moat relies on automated test equipment and robotics, contrasting Monolithic’s focus on IC design. Despite strong revenue growth, Teradyne faces declining ROIC and margin pressures, signaling a thinning moat. Expansion in industrial automation offers hope but remains a challenge.
Integrated Circuit Innovation vs. Automation Systems: The Moat Face-Off
Monolithic Power holds a wider, more durable moat with rising ROIC and stable margins. Teradyne’s retreating ROIC warns of vulnerability. Monolithic is better equipped to defend its market share in an intensifying semiconductor landscape.
Which stock offers better returns?
The 12-month stock price trajectories for Monolithic Power Systems, Inc. and Teradyne, Inc. reveal strong bullish momentum, with notable acceleration and distinct trading volume dynamics shaping their market performance.
Trend Comparison
Monolithic Power Systems, Inc. (MPWR) shows a 70.78% price increase over the past year, reflecting an accelerating bullish trend. The stock reached a high of 1,173.22 and a low of 477.39, with volatility indicated by a high standard deviation of 149.13.
Teradyne, Inc. (TER) outperformed with a 142.12% gain in the same period, also under accelerating bullish momentum. Its price ranged between 68.72 and 249.53, exhibiting lower volatility with a standard deviation of 38.54.
Comparing both stocks, Teradyne delivered the highest market performance, nearly doubling MPWR’s price appreciation while sustaining strong buyer dominance and accelerating upward momentum.
Target Prices
Analyst consensus presents a bullish outlook for Monolithic Power Systems and Teradyne.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| Monolithic Power Systems, Inc. | 1025 | 1375 | 1214.29 |
| Teradyne, Inc. | 136 | 280 | 230.17 |
Monolithic Power Systems’ target consensus sits slightly above its current price of 1173, indicating moderate upside. Teradyne’s consensus target also exceeds the current 249.53 price, signaling positive analyst sentiment.
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How do institutions grade them?
The following tables summarize recent grades assigned by reputable institutions for Monolithic Power Systems, Inc. and Teradyne, Inc.:
Monolithic Power Systems, Inc. Grades
Key institutional grades for Monolithic Power Systems, Inc. over the past months:
| 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 |
| Keybanc | Maintain | Overweight | 2025-10-31 |
| TD Cowen | Maintain | Buy | 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 |
Teradyne, Inc. Grades
Recent institutional grades for Teradyne, Inc. highlight consistent buy ratings:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Cantor Fitzgerald | Maintain | Overweight | 2026-02-02 |
| Stifel | Maintain | Buy | 2026-01-30 |
| UBS | Maintain | Buy | 2026-01-26 |
| B of A Securities | Maintain | Buy | 2026-01-22 |
| Stifel | Maintain | Buy | 2026-01-14 |
| B of A Securities | Maintain | Buy | 2026-01-13 |
| Goldman Sachs | Upgrade | Buy | 2025-12-16 |
| Stifel | Upgrade | Buy | 2025-12-02 |
| Citigroup | Maintain | Buy | 2025-11-12 |
| JP Morgan | Maintain | Neutral | 2025-10-30 |
Which company has the best grades?
Teradyne, Inc. consistently receives buy and overweight ratings from multiple major institutions. Monolithic Power Systems also shows strong support but includes some neutral and equal weight grades. Teradyne’s stronger consensus could signal greater institutional confidence, impacting investor sentiment 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
Monolithic Power Systems, Inc. (MPWR)
- Faces intense competition in semiconductor power electronics with rapid innovation cycles.
Teradyne, Inc. (TER)
- Operates in highly competitive automated test equipment and industrial automation markets with diverse segment exposure.
2. Capital Structure & Debt
Monolithic Power Systems, Inc. (MPWR)
- Very low debt-to-equity (0.01), strong interest coverage, indicating conservative leverage and financial stability.
Teradyne, Inc. (TER)
- Slightly higher debt-to-equity (0.03) but negative interest coverage, signaling potential short-term financial stress.
3. Stock Volatility
Monolithic Power Systems, Inc. (MPWR)
- Beta of 1.455 reflects moderate sensitivity to market swings in a volatile semiconductor sector.
Teradyne, Inc. (TER)
- Higher beta at 1.821 suggests greater stock price volatility and risk relative to the market.
4. Regulatory & Legal
Monolithic Power Systems, Inc. (MPWR)
- Subject to global semiconductor trade regulations, with exposure to export controls and IP protection risks.
Teradyne, Inc. (TER)
- Faces complex regulatory environments across multiple industries including defense and industrial automation.
5. Supply Chain & Operations
Monolithic Power Systems, Inc. (MPWR)
- Global supply chain exposure with reliance on manufacturing partners in Asia; semiconductor shortages remain a risk.
Teradyne, Inc. (TER)
- Diverse manufacturing and supply chain with potential bottlenecks in robotics components and test equipment parts.
6. ESG & Climate Transition
Monolithic Power Systems, Inc. (MPWR)
- Faces pressure to improve energy efficiency in products and reduce carbon footprint amid increasing ESG demands.
Teradyne, Inc. (TER)
- Strong focus on automation aligns with sustainability trends but must manage resource use and regulatory ESG compliance.
7. Geopolitical Exposure
Monolithic Power Systems, Inc. (MPWR)
- Significant international sales in China, Taiwan, and South Korea expose it to geopolitical tensions and trade uncertainties.
Teradyne, Inc. (TER)
- Global operations including defense segments increase geopolitical risk exposure, especially amid US-China tech rivalry.
Which company shows a better risk-adjusted profile?
Monolithic Power’s low leverage, excellent interest coverage, and moderate beta offer a more stable risk profile. Teradyne’s wider segment exposure and higher beta increase risk despite solid operational diversity. Teradyne’s negative interest coverage flags financial caution. The biggest risk for Monolithic Power is its geopolitical exposure in Asia. For Teradyne, financial stress and stock volatility rise as dominant concerns. Monolithic Power’s conservative capital structure and safer financial footing justify its superior risk-adjusted profile in 2026.
Final Verdict: Which stock to choose?
Monolithic Power Systems (MPWR) impresses with its exceptional capital efficiency and rapidly growing return on invested capital. Its superpower lies in generating strong free cash flow while maintaining a durable economic moat. The main point of vigilance is its elevated current ratio, which could indicate excess working capital. MPWR suits aggressive growth portfolios seeking durable value creation.
Teradyne (TER) offers a strategic moat anchored in consistent innovation and recurring revenue streams. It displays solid financial stability with a more moderate leverage profile compared to MPWR. TER’s lower valuation multiples and safer balance sheet make it attractive for portfolios focused on growth at a reasonable price (GARP), balancing growth potential with risk management.
If you prioritize high-efficiency capital deployment and accelerating profitability, MPWR is the compelling choice due to its superior ROIC trend and robust free cash flow generation. However, if you seek more stability and a conservative valuation framework, TER offers better downside protection and steady growth potential. Each company fits distinct investor profiles, demanding careful alignment with your risk tolerance and return expectations.
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 Monolithic Power Systems, Inc. and Teradyne, Inc. to enhance your investment decisions:
