Microchip (MCHP) AI Stock Analysis

• Market Cap: $28.41B
• Dividend Yield: 3.4%
• Average Volume (3M): 8.46M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.95
• Revenue Growth: -23.36%
• EPS Growth: -131.15%
• Country: US
• Employees: 22,300
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.35
• Shares Outstanding: 540,446,840
• 10 Day Avg. Volume: 9,605,148
• 30 Day Avg. Volume: 8,457,830
• PEG Ratio: 519.48
• Price to Book (P/B): 3.67
• Price to Sales (P/S): 5.91
• P/FCF Ratio: 33.69
• Enterprise Value/Market Cap: 1.41
• Enterprise Value/Revenue: 9.54
• Enterprise Value/Gross Profit: 19.05
• Enterprise Value/Ebitda: 52.43
• 1Y Price Target: $72.64
• Price Target Upside: 35.57% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16
• EPS Forecast (FY): 1.43
• Revenue Forecast (FY): $4.54B

• Rating: 51 Neutral
• Price Target: $49.00 ▼(-8.55% Downside)

Microchip's overall stock score is primarily impacted by its financial performance challenges, including declining revenues and negative net income. Technical analysis indicates bearish momentum, further weighing on the score. Despite these issues, the company shows resilience in cash flow and strategic growth in certain segments, providing some optimism for future recovery.

Positive Factors

Cash Flow Resilience

Microchip's strong cash flow metrics, despite profitability challenges, indicate robust liquidity and the ability to fund operations and investments.

Strategic Growth Initiatives

Focusing on advanced technologies and AI positions Microchip for future growth and market leadership in high-demand sectors.

Inventory Management

Effective inventory management enhances operational efficiency and reduces costs, supporting long-term profitability improvements.

Negative Factors

Profitability Challenges

Sustained profitability issues can hinder financial health, limiting reinvestment capacity and shareholder returns over the long term.

Revenue Decline

A significant revenue decline indicates potential market share loss and challenges in maintaining competitive positioning.

Inventory Write-offs

High inventory write-offs and charges suggest inefficiencies in production planning, impacting margins and financial performance.

Microchip Business Overview & Revenue Model

Company Description

Microchip Technology Incorporated (MCHP) is a leading provider of smart, connected, and secure embedded control solutions. The company operates in various sectors including automotive, industrial, consumer electronics, and communications. Microchip designs and manufactures a broad range of microcontrollers, analog semiconductors, memory products, and development tools, catering to both high-volume and niche applications. With a focus on innovation and customer-centric solutions, Microchip supports a diverse array of industries by providing products that enable advanced functionalities and connectivity in electronic systems.

How the Company Makes Money

Microchip generates revenue primarily through the sale of its semiconductor products, including microcontrollers, analog devices, and memory chips. The company benefits from a diverse customer base across multiple industries, which helps stabilize its revenue streams. Key revenue sources include direct sales to original equipment manufacturers (OEMs) and distributors, as well as royalties from licensing agreements. Microchip also engages in partnerships with technology firms to develop integrated solutions, enhancing its product offerings and market reach. Additionally, the company invests in research and development to continuously innovate and improve its product portfolio, which contributes to long-term revenue growth.

Microchip Financial Statement Overview

Summary

Microchip faces significant challenges in profitability with declining revenues and negative net income. However, the company maintains a stable balance sheet with manageable leverage and strong cash flow generation. To improve its financial standing, Microchip needs to focus on reversing revenue declines and enhancing profitability while leveraging its solid cash flow position.

Income Statement

Microchip's income statement shows significant challenges with a negative net profit margin of -4.39% in TTM, indicating losses. Revenue has sharply declined by 55.2% in the TTM period, reflecting a downturn in sales. Gross profit margin remains moderate at 54.06%, but EBIT and EBITDA margins are weak, especially with EBIT at -0.94%. The company needs to address these profitability issues to improve its financial health.

Balance Sheet

The balance sheet reveals a moderate debt-to-equity ratio of 0.80 in TTM, suggesting manageable leverage. However, the return on equity is negative at -2.78%, indicating inefficiencies in generating returns for shareholders. The equity ratio stands at 46.28%, showing a stable capital structure. While leverage is under control, the company must focus on improving profitability to enhance shareholder value.

Cash Flow

Cash flow analysis shows resilience with a positive free cash flow growth rate of 3.97% in TTM. The operating cash flow to net income ratio is strong at 0.81, indicating good cash generation relative to net income. The free cash flow to net income ratio is also healthy at 0.90. Despite profitability challenges, the company maintains solid cash flow metrics, which is a positive sign for liquidity.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	4.21B	4.40B	7.63B	8.44B	6.82B	5.44B
Gross Profit	2.11B	2.47B	5.00B	5.70B	4.45B	3.38B
EBITDA	766.30M	1.04B	3.44B	4.10B	2.87B	1.83B
Net Income	-185.10M	-500.00K	1.91B	2.24B	1.29B	349.40M
Balance Sheet
Total Assets	14.47B	15.37B	15.87B	16.37B	16.20B	16.48B
Cash, Cash Equivalents and Short-Term Investments	236.80M	771.70M	319.70M	234.00M	319.40M	282.00M
Total Debt	5.41B	5.67B	6.03B	6.60B	7.85B	9.07B
Total Liabilities	7.77B	8.30B	9.22B	9.86B	10.30B	11.14B
Stockholders Equity	6.70B	7.08B	6.66B	6.51B	5.89B	5.34B
Cash Flow
Free Cash Flow	754.40M	772.10M	2.61B	3.13B	2.47B	1.82B
Operating Cash Flow	841.10M	898.10M	2.89B	3.62B	2.84B	1.92B
Investing Cash Flow	-197.00M	-287.80M	-392.10M	-599.50M	-477.70M	-173.30M
Financing Cash Flow	-693.40M	-158.30M	-2.41B	-3.10B	-2.33B	-1.86B

Microchip Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 53.58
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 53.58 is below the 20-day moving average (MA) of 54.87, below the 50-day MA of 60.58, and below the 200-day MA of 59.31, indicating a bearish trend. The MACD of -3.04 indicates Negative momentum. The RSI at 38.73 is Neutral, neither overbought nor oversold. The STOCH value of 47.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MCHP.

Microchip Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MPWR	71 Outperform	$44.31B	23.62	64.03%	0.64%	30.48%	339.29%
ON	68 Neutral	$19.97B	64.78	3.87%	―	-16.13%	-81.06%
SWKS	64 Neutral	$9.81B	21.44	7.89%	4.28%	-2.18%	-16.84%
NXPI	63 Neutral	$49.06B	23.94	21.19%	2.20%	-6.81%	-23.16%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
STM	57 Neutral	$20.24B	39.82	3.00%	1.53%	-17.33%	-76.71%
MCHP	51 Neutral	$28.41B	―	-2.85%	3.40%	-23.36%	-131.15%

Microchip Corporate Events

Microchip Technology’s Earnings Call: Mixed Sentiment and Strategic Growth

Microchip Technology’s latest earnings call presented a mixed sentiment, highlighting robust growth in certain sectors such as data centers and strategic advancements in high-performance products. However, challenges persist with inventory management, underutilization charges, and a seasonally weak December quarter. The company is emphasizing operational discipline and strategic growth in advanced technologies to navigate these hurdles.

Microchip Technology Reports Q2 Fiscal 2026 Earnings

Microchip Technology Inc., headquartered in Chandler, Arizona, is a leading provider of smart, connected, and secure embedded control solutions, serving diverse markets such as industrial, automotive, consumer, aerospace and defense, communications, and computing.