Semiconductor designer Power Integrations (NASDAQ: POWI) reported Q2 CY2026 results exceeding the market’s revenue expectations, with sales up 2.7% year on year to $118.9 million. The company expects next quarter’s revenue to be around $126 million, close to analysts’ estimates. Its non-GAAP profit of $0.37 per share was 15.8% above analysts’ consensus estimates.
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Power Integrations (POWI) Q2 CY2026 Highlights:
- Revenue: $118.9 million vs analyst estimates of $117.4 million (2.7% year-on-year growth, 1.3% beat)
- Adjusted EPS: $0.37 vs analyst estimates of $0.32 (15.8% beat)
- Adjusted Operating Income: $20.31 million vs analyst estimates of $16.97 million (17.1% margin, 19.7% beat)
- Revenue Guidance for Q3 CY2026 is $126 million at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 7.5%, up from -1.2% in the same quarter last year
- Free Cash Flow Margin: 14.9%, down from 20% in the same quarter last year
- Inventory Days Outstanding: 264, down from 291 in the previous quarter
- Market Capitalization: $3.60 billion
Company Overview
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.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Power Integrations’s demand was weak and its revenue declined by 6.4% per year. This wasn’t a great result and is a sign of poor business quality. 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 annualized revenue growth of 4.3% over the last two years is above its five-year trend, which is encouraging. 
This quarter, Power Integrations reported modest year-on-year revenue growth of 2.7% but beat Wall Street’s estimates by 1.3%. Company management is currently guiding for a 6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 13% over the next 12 months. Although this projection suggests its newer products and services will fuel better top-line performance, it is still below the sector average.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’s 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 264, which is 19 days above its five-year average. These numbers suggest that despite the recent decrease, the company’s inventory levels are higher than what we’ve seen in the past.
Key Takeaways from Power Integrations’s Q2 Results
It was good to see Power Integrations beat analysts’ EPS expectations this quarter. We were also excited its operating income outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock remained flat at $62.15 immediately after reporting.
Power Integrations may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
