Power Integrations is a high-margin power-conversion franchise emerging from an inventory trough, with 2200V PowiGaN and AI infrastructure optionality supporting an attractive five-year base-case return.
Overview
Power Integrations (NASDAQ: POWI) designs and sells proprietary high-voltage power-conversion ICs and gate drivers, integrating switches, control, sensing, and isolation to improve efficiency and reduce customer system complexity. Its products serve industrial, consumer, computer and communications, and automotive markets, with shipments concentrated in Asia-Pacific and a hybrid engineering-sales/distributor model. The company’s differentiation rests on more than 200 patents, FluxLink isolation, proprietary PowiGaN and packaging technology, and customer qualification costs. Q2 2026 revenue was **$118.94 million**, up 2.7% year over year and 9.8% sequentially; adjusted non-GAAP EPS of **$0.37** beat consensus by 15.8%. Non-GAAP gross margin was 55.1% and operating margin recovered to 17.1%. Management guided Q3 revenue to $122.0 million–$130.0 million and operating margin to 17.0%–19.0%. Valuation is elevated against depressed trailing earnings—approximately 113.5x–118.0x GAAP P/E and 34.0x–37.5x forward non-GAAP P/E—but reflects recovery expectations and the company’s margin profile. **The near-term setup is a cyclical recovery with improving margins**, while 2200V PowiGaN design wins in AI data centers, EVs, and grid infrastructure are longer-term catalysts. The report’s probability-weighted five-year share-price target is $92.73 versus a modeled current price of $52.00.