Power Integrations Pivots to High-Voltage GaN and Data Center Growth
A Turning Point for Power Integrations
When Power Integrations reported Q1 2026 results, the message was clear: the company is repositioning itself around high-voltage GaN and the power infrastructure that will feed AI data centers. Revenue of $108 million was up 3% year-over-year, a modest but meaningful improvement after two years of contraction. As CEO Jen Lloyd put it, “industrial was the main driver of revenue growth again this quarter, up 23% year-over-year.” — Jennifer Lloyd, Chief Executive Officer · 2026-05-09 The consumer segment, hurt earlier by tariff-related pull-ins, showed sequential strength—up 17%—as inventory cleared.
The company guided Q2 revenue to $115–$120 million (up 8.5% sequentially at the midpoint), with non-GAAP gross margin improving to 54–55%. Beyond the near term, management is making a bold bet on its high-voltage power supply platform, which leverages a proprietary GaN process that scales from 650V to 1,700V.
The $1B Data Center Opportunity
Jen Lloyd has consistently talked up data center opportunities, but the latest call marked a step-change in specificity. She stated,
That estimate now explicitly includes gate driver products for grid modernization, not just the rack-level supplies that have been the earlier focus. Engagements with NVIDIA for 800-volt DC architectures are advancing, and new design wins in auxiliary power supplies at Taiwan server OEMs were highlighted in Q&A.Altogether, we estimate that our data center SAM, including rack and grid applications, will exceed $1 billion by 2030.
This is not a sudden revelation; it is an acceleration of a trajectory traced over several quarters. On the November 2025 call, Jennifer Lloyd noted, “So, I think 2027 is when we'll be releasing the first products that can go into the main supply of the data center architecture.” — Jennifer Lloyd, CEO · 2025-11-05 And Balu Balakrishnan, the former CEO, had already signaled on the May 2025 call, “we are already designed into AI server power supplies with our standby products, which are also GaN-based.” — Balu Balakrishnan, Chairman and CEO · 2025-02-06 The new $1B SAM target reflects growing confidence that GaN will displace silicon carbide in the main power path, a theme that is gaining traction across the industry (see global data center keywords).
Restructuring for Margin and Time to Market
Under the leadership of new CEO Jen Lloyd and CFO Nancy Erba, Power Integrations is also tightening its operational discipline. A February restructuring moved application engineers from marketing into R&D, a move designed to cut time to market and focus resources on the highest-ROI projects. As Nancy Erba said, “We are applying the same ROI-based discipline to capital decisions that we are to operating expenses.” — Nancy Erba, Chief Financial Officer · 2026-05-09 The company reduced inventory to 292 days on hand (down 21 days sequentially) and channel weeks to 8.9, approaching the 8-week target, with further improvement expected through the year.
The financial results reflect the payoff: Q1 revenue of $108M was the second consecutive quarter above $105M, a sign the bottom is behind. Non-GAAP operating margin rose to 11.7% in Q1 from 9.7% in Q4, and management guides Q2 to 13.5–15.5%. While profitability is still well below the peak of 2020, the direction is clear.
This is a company in transition—one that is consciously trading short-term consumer strength for long-term exposure to AI, electrification, and grid rebuilding. The market acknowledged the progress: the stock is up 1.2% over the last 90 days, but it remains 37% below its June 2026 peak, reflecting the long runway to material data center revenue. If management executes on its time to market initiatives and the $1B SAM materializes, the current valuation could look inexpensive. For now, the second quarter guidance offers immediate momentum, and the strategic pivot gives investors a reason to look beyond the near-term revenue base.