Semiconductor designer Power Integrations (NASDAQ:POWI) met Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 1.9% year on year to $103.2 million. The company expects next quarter’s revenue to be around $106.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.23 per share was 19.5% above analysts’ consensus estimates.

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Revenue: $103.2 million vs analyst estimates of $103 million (1.9% year-on-year decline, in line)

Adjusted EPS: $0.23 vs analyst estimates of $0.19 (19.5% beat)

Adjusted Operating Income: $10.02 million vs analyst estimates of $8.13 million (9.7% margin, 23.2% beat)

Revenue Guidance for Q1 CY2026 is $106.5 million at the midpoint, roughly in line with what analysts were expecting

Operating Margin: 8.5%, up from 3.7% in the same quarter last year

Free Cash Flow Margin: 18.6%, up from 11.1% in the same quarter last year

Inventory Days Outstanding: 313, up from 277 in the previous quarter

Market Capitalization: $2.61 billion

Power Integrations CEO Jen Lloyd commented: “I am pleased that we returned to growth in 2025 with a six-percent increase in total revenue, led by our industrial category which grew 15 percent. The growth in industrial was driven by record sales in our high-power gate-driver business, plus strength in metering, power tools, automotive and broad-based industrial applications. Additionally, total revenue from PowiGaN™ products grew more than 40 percent for the year.”

A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ:POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Power Integrations’s demand was weak over the last five years as its sales fell at a 1.9% annual rate. This wasn’t a great result and suggests it’s a low quality business. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Power Integrations’s revenue over the last two years was flat, sugggesting its demand was weak but stabilized after its initial drop.

This quarter, Power Integrations reported a rather uninspiring 1.9% year-on-year revenue decline to $103.2 million of revenue, in line with Wall Street’s estimates. Company management is currently guiding for flat sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 7.6% over the next 12 months. Although this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average.

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Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, Power Integrations’s DIO came in at 313, which is 86 days above its five-year average, suggesting that the company’s inventory has grown to higher levels than we’ve seen in the past.

It was good to see Power Integrations beat analysts’ EPS expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. On the other hand, its inventory levels materially increased. Overall, we think this was still a solid quarter with some key areas of upside. Investors were likely hoping for more, and shares traded down 3.3% to $45.84 immediately after reporting.

Big picture, is Power Integrations a buy here and now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.