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Microchip
(NASDAQ:MCHP)
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Rating:63Neutral
Price Target:
$83.00
▲(12.93% Upside)
Action:Reiterated
Date:08/20/26
The score is driven primarily by improving financial performance and strong cash generation, reinforced by an upbeat earnings outlook (strong guidance and bookings/backlog). Offsetting these positives are weak-to-mixed technical momentum and a very high P/E that leaves the stock exposed to execution and cycle risk; leverage and potential dilution from the expanded equity incentive pool are secondary headwinds.
Positive Factors
Revenue and Margin Recovery
The return to revenue growth and improved profitability indicates recovery from the 2025 downturn. Sustained embedded demand and operating leverage could support earnings improvement, although margins remain below prior-cycle peaks.
Negative Factors
Meaningful Leverage
The debt burden remains material relative to liquidity and requires management to prioritize deleveraging over shareholder returns. High leverage can constrain investment flexibility and amplify downside during future semiconductor demand weakness.
Read all positive and negative factors
Positive Factors
Negative Factors
Revenue and Margin Recovery
The return to revenue growth and improved profitability indicates recovery from the 2025 downturn. Sustained embedded demand and operating leverage could support earnings improvement, although margins remain below prior-cycle peaks.
Read all positive factors
Microchip Key Performance Indicators (KPIs)
Any
Gross Profit by Segment
Reveals the profitability of different business segments, highlighting which areas are driving earnings and which may need strategic adjustments.
Reveals the profitability of different business segments, highlighting which areas are driving earnings and which may need strategic adjustments.
Data provided by:
The Fly
The FlyMicrochip (MCHP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$39.91B
Dividend Yield2.46%
Average Volume (3M)11.39M
Price to Earnings (P/E)102.6
Beta (1Y)2.08
Revenue Growth20.93%
EPS GrowthN/A
CountryUS
Employees17,900
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)0.72
Shares Outstanding543,008,670
10 Day Avg. Volume9,975,013
30 Day Avg. Volume11,387,122
Financial Highlights & Ratios
PEG Ratio-0.04
Price to Book (P/B)5.44
Price to Sales (P/S)7.42
P/FCF Ratio40.17
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$106.44Price Target Upside44.82% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering19
EPS Forecast (FY)3.64
Revenue Forecast (FY)$6.40B
Microchip Business Overview & Revenue Model
Company Description
Microchip Technology Incorporated creates, produces, and sells intelligent, interconnected, and secure embedded control solutions to customers throughout the Americas, Europe, and Asia. The company's core offerings include a range of microcontroll...
How the Company Makes Money
Microchip primarily makes money by selling semiconductor devices and related development ecosystems to original equipment manufacturers (OEMs) and electronics manufacturers through a mix of direct sales and distribution channels. Its main revenue ...
Microchip Earnings Call Summary
Earnings Call Date:Aug 06, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Feb 04, 2027
Earnings Call Sentiment Positive
The call communicated strong operational and financial momentum: robust revenue growth, expanding margins, very strong bookings, accelerating data-center exposure and notable design wins, supported by strong cash generation and improving leverage. Headwinds include supply-chain constraints (foundry/OSAT/substrate/test), some one-time/lumpy margin benefits that may not repeat, elevated inventory levels (though improving), and a high net-debt balance that management is prioritizing for paydown. On balance, the positive execution, strong bookings/backlog, and meaningful data-center opportunity outweigh the challenges.Positive Updates
Strong Revenue Growth
Net sales in the June quarter were $1.485 billion, up 13.2% sequentially and up 38% year-over-year.
Negative Updates
Supply Chain and Lead-Time Constraints
Lead times are stretching on many products due to constrained substrates, foundry nodes, OSAT and external test capacity; increased expedited shipment requests often go unsupported in-quarter.
Read all updates
Q1-2027 Updates
Positive
Negative
Strong Revenue Growth
Net sales in the June quarter were $1.485 billion, up 13.2% sequentially and up 38% year-over-year.
Read all positive updates
Company Guidance
For the September quarter Microchip guided to net sales up 8% sequentially (+/‑1%) — at the midpoint +40.6% year‑over‑year — with non‑GAAP gross margin of 66%–67%, non‑GAAP operating expenses of about 27.5% of sales, non‑GAAP operating profit of 38.5%–39.5% of sales, and non‑GAAP diluted EPS of $0.91–$0.95 (midpoint +165.7% YoY, +22.4% sequentially). Management reiterated a FY‑2027 non‑GAAP cash tax rate of ~7.5% and FY‑2027 CapEx of about $100M, said underutilization charges should continue to decline (roughly an $8M sequential reduction expected), noted price increases implemented mid‑August/early‑September will only modestly affect the September quarter (full‑quarter benefit in December), reported a strong book‑to‑bill >1 and rising backlog, and expects net‑debt/adjusted‑EBITDA to fall materially from 2.85 (June 30) to below ~2.5 this quarter.Microchip Financial Statement Overview
Summary
Income Statement
67
Positive
Balance Sheet
63
Positive
Cash Flow
74
Positive
| Breakdown | TTM | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.12B | 4.71B | 4.40B | 7.63B | 8.44B | 6.82B |
| Gross Profit | 3.08B | 2.72B | 2.47B | 5.00B | 5.70B | 4.45B |
| EBITDA | 1.68B | 1.40B | 1.04B | 3.44B | 4.10B | 2.87B |
| Net Income | 450.60M | 202.20M | -500.00K | 1.91B | 2.24B | 1.29B |
Balance Sheet | ||||||
| Total Assets | 14.41B | 14.37B | 15.37B | 15.87B | 16.37B | 16.20B |
| Cash, Cash Equivalents and Short-Term Investments | 272.30M | 240.30M | 771.70M | 319.70M | 234.00M | 319.40M |
| Total Debt | 5.40B | 5.54B | 5.67B | 6.03B | 6.60B | 7.85B |
| Total Liabilities | 7.96B | 7.93B | 8.30B | 9.22B | 9.86B | 10.30B |
| Stockholders Equity | 6.45B | 6.43B | 7.08B | 6.66B | 6.51B | 5.89B |
Cash Flow | ||||||
| Free Cash Flow | 1.11B | 871.00M | 772.10M | 2.61B | 3.13B | 2.47B |
| Operating Cash Flow | 1.20B | 962.10M | 898.10M | 2.89B | 3.62B | 2.84B |
| Investing Cash Flow | -210.60M | -195.50M | -287.80M | -392.10M | -599.50M | -477.70M |
| Financing Cash Flow | -1.28B | -1.30B | -158.30M | -2.41B | -3.10B | -2.33B |
Microchip Technical Analysis
Negative
73.50
Price Trends
82.57
Negative
85.45
Negative
75.87
Negative
Market Momentum
-2.00
Positive
41.77
Neutral
12.18
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCHP, the sentiment is Negative. The current price of 73.5 is below the 20-day moving average (MA) of 77.10, below the 50-day MA of 82.57, and below the 200-day MA of 75.87, indicating a bearish trend. The MACD of -2.00 indicates Positive momentum. The RSI at 41.77 is Neutral, neither overbought nor oversold. The STOCH value of 12.18 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MCHP.
Microchip Risk Analysis
Microchip disclosed 49 risk factors in its most recent earnings report. Microchip reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Microchip Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $56.67B | 18.94 | 28.05% | 1.51% | 8.77% | 39.24% | |
78 Outperform | $64.09B | 79.50 | 21.78% | 0.53% | 28.67% | -57.45% | |
67 Neutral | $28.23B | 46.34 | 8.38% | ― | -3.14% | 44.55% | |
63 Neutral | $39.91B | 102.60 | 6.90% | 2.31% | 20.93% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $9.89B | 34.34 | 5.04% | 4.72% | 0.06% | -22.93% | |
56 Neutral | $44.29B | 93.81 | 2.66% | 0.70% | 10.06% | -27.68% |
* Technology Sector Average
MCHP
Microchip
74.05
10.47
16.46%
MPWR
Monolithic Power
1,303.88
451.39
52.95%
NXPI
NXP Semiconductors
223.15
-11.74
-5.00%
ON
ON Semiconductor
73.22
22.44
44.19%
SWKS
Skyworks Solutions
66.62
-6.75
-9.20%
STM
STMicroelectronics
49.66
22.32
81.62%
Microchip Corporate Events
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
Microchip Shareholders Expand Equity Incentive Plan at Meeting
Positive
Aug 19, 2026
At its annual meeting of stockholders on August 18, 2026, Microchip shareholders approved an amendment and restatement of the company’s 2004 Equity Incentive Plan, increasing the number of shares of common stock available for issuance by 12,...
Business Operations and StrategyExecutive/Board Changes
Microchip COO Resigns, Prompting Leadership Transition Focus
Neutral
Jul 24, 2026
Microchip Technology said that on July 23, 2026, Chief Operating Officer Richard J. Simoncic notified the company of his resignation, effective August 17, 2026. He is leaving to become chief executive officer of Menlo Microsystems, Inc., a private...
Executive/Board Changes
Microchip Appoints Former Executive Mitch Little as Director
Neutral
Jun 1, 2026
Microchip Technology’s board of directors has appointed former senior executive Mitch Little as an independent director, effective June 1, 2026, following a recommendation from its Nominating, Governance and Sustainability Committee. Little,...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.