Investigation Launched After Report of Nvidia Order Cancellation at Monolithic Power

What happened

A law firm has initiated an investigation into Monolithic Power Systems (MPWR) following a November 2024 Edgewater Research report that Nvidia, MPWR's largest customer, cancelled half of its outstanding orders. This investigation adds legal overhang but does not introduce new fundamental information, as the DeepValue Master Report already flagged Nvidia concentration and order cancellation risk as key thesis breakers. The report noted that one indirect AI customer accounted for 17% of 2024 revenue and that Enterprise Data revenue decelerated sharply in 2025, with a Q2 YoY decline. While MPWR's diversification into auto and industrial provides some buffer, the stock's premium valuation leaves little room for disappointment. The investigation underscores the fragile nature of MPWR's AI-dependent growth story and the asymmetric downside from its largest customer.

Implication

The investigation reinforces the risk of Nvidia dependency already priced into the bear case. Without evidence that Nvidia's order cancellation is temporary or that MPWR's diversification is accelerating, the stock offers unfavorable risk/reward at current levels, with downside to $750 if the bear scenario materializes.

Thesis delta

The investigation does not change the fundamental thesis but elevates legal/regulatory risk. It validates the bear case that Nvidia concentration is a critical vulnerability, reducing the probability of sustained high-teens growth. The thesis shifts slightly from 'potential sell' to 'avoid' until MPWR demonstrates that auto and industrial growth can offset any AI revenue shortfall.