Microchip (MCHP) AI Stock Analysis

• Market Cap: $38.66B
• Dividend Yield: 2.54%
• Average Volume (3M): 9.14M
• Price to Earnings (P/E): 84.3
• Beta (1Y): 1.92
• Revenue Growth: -42.35%
• EPS Growth: -100.12%
• Country: US
• Employees: 22,300
• Sector: Technology
• Sector Strength: 84
• Industry: Semiconductors
• EPS (TTM): 0.11
• Shares Outstanding: 539,399,500
• 10 Day Avg. Volume: 8,413,214
• 30 Day Avg. Volume: 9,139,794
• PEG Ratio: -4.81
• Price to Book (P/B): 5.24
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 48.18
• Enterprise Value/Market Cap: 1.09
• Enterprise Value/Revenue: 1.98
• Enterprise Value/Gross Profit: 17.06
• Enterprise Value/Ebitda: 5.86
• 1Y Price Target: $67.20
• Price Target Upside: -8.15% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 20

• Rating: 64 Neutral
• Price Target: $69.00 ▼(-5.69%Downside)

Microchip's overall stock score reflects significant financial challenges, with declining revenue and profitability being the most concerning factors. While technical indicators are positive, the valuation is problematic due to negative earnings. The earnings call provides some optimism with strategic improvements, but the company faces ongoing financial and operational hurdles.

Positive Factors

Aerospace & Defense sector

MCHP expects robust trends in the Aerospace & Defense sector, which is margin accretive.

Bookings and backlog

Cyclical recovery trends have led to the highest bookings in two years, with increased order strength and improved backlog.

Revenue growth

Microchip raised the revenue guidance for the June quarter, showing the highest sequential revenue growth in the coverage.

Negative Factors

Gross margin

Gross margin (incl. SBC) fell 308 basis points QoQ to 51.6%, below our estimate of 52.5% and Consensus of 52.7% due to lower utilization.

Inventory correction

Microcontrollers were worse than expected as continued inventory correction was likely to blame.

Tariff-related revenue

Some of the revenue growth is driven by tariff-related pull-ins, with an expected slowdown in orders later, though it may be short-lived.

Microchip Business Overview & Revenue Model

Company Description

Microchip Technology Inc. (MCHP) is a leading provider of microcontroller, mixed-signal, analog, and Flash-IP solutions. The company operates primarily in the semiconductor industry, offering a wide range of products that serve a diverse range of applications across industrial, automotive, consumer, aerospace, and computing markets. Microchip's core products include microcontrollers, analog devices, and other semiconductor components that facilitate intelligent control and communication in electronic devices.

How the Company Makes Money

Microchip makes money by designing, manufacturing, and selling semiconductor products and solutions. Its primary revenue streams come from the sale of microcontrollers, which are used in a variety of electronic devices to provide processing power and control functions. The company also generates income from analog and interface products, which are critical for signal processing and communication in electronic systems. Additionally, Microchip offers licensing and royalties for its proprietary Flash-IP solutions. Significant partnerships with original equipment manufacturers (OEMs) and distributors enhance its market reach and contribute to its earnings by ensuring a steady demand for its products across multiple sectors.

Microchip Financial Statement Overview

Summary

Microchip is facing significant financial challenges with declining revenue and profitability, as well as a negative net income in 2025. The income statement shows a major revenue drop from $8.44B in 2023 to $4.40B in 2025. Despite improvements in equity and stable EBIT and EBITDA margins, the high debt level and declining cash flow metrics pose financial risks.

Income Statement

The income statement shows a decline in total revenue from $8.44B in 2023 to $4.40B in 2025 and a negative net income in 2025, signaling financial challenges. Gross profit margins have declined from 67.5% in 2023 to 56.1% in 2025, reflecting reduced profitability. Despite this, EBIT and EBITDA margins remained relatively stable, indicating operational efficiency. However, the overall revenue trend is unfavorable, and the net loss is a significant concern.

Balance Sheet

The balance sheet indicates a decrease in total debt from $6.44B in 2023 to $5.63B in 2025, which is positive. However, the debt-to-equity ratio remains high, suggesting potential financial risk. Stockholders' equity increased from $6.51B in 2023 to $7.08B in 2025, improving the equity ratio. Nevertheless, the high level of total liabilities relative to equity raises concerns about financial leverage and stability.

Cash Flow

The cash flow statement shows a significant drop in operating cash flow from $3.62B in 2023 to $898M in 2025, which is concerning. Free cash flow, although reduced, remains positive, indicating some financial flexibility. The decline in cash flow metrics suggests challenges in cash generation, but the company's ability to maintain positive free cash flow is a positive aspect.

Breakdown	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	4.40B	7.63B	8.44B	6.82B	5.44B
Gross Profit	2.47B	5.00B	5.70B	4.45B	3.38B
EBITDA	1.04B	3.44B	4.11B	2.88B	1.85B
Net Income	-500.00K	1.91B	2.24B	1.29B	349.40M
Balance Sheet
Total Assets	15.37B	15.87B	16.37B	16.20B	16.48B
Cash, Cash Equivalents and Short-Term Investments	771.70M	319.70M	234.00M	319.40M	282.00M
Total Debt	5.67B	6.03B	6.60B	7.85B	9.07B
Total Liabilities	8.30B	9.22B	9.86B	10.30B	11.14B
Stockholders Equity	7.08B	6.66B	6.51B	5.89B	5.34B
Cash Flow
Free Cash Flow	772.10M	2.61B	3.13B	2.47B	1.82B
Operating Cash Flow	898.10M	2.89B	3.62B	2.84B	1.92B
Investing Cash Flow	-287.80M	-392.10M	-599.50M	-477.70M	-173.30M
Financing Cash Flow	-158.30M	-2.41B	-3.10B	-2.33B	-1.86B

Microchip Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 73.16
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCHP, the sentiment is Positive. The current price of 73.16 is above the 20-day moving average (MA) of 68.76, above the 50-day MA of 59.60, and above the 200-day MA of 60.36, indicating a bullish trend. The MACD of 3.41 indicates Positive momentum. The RSI at 72.34 is Negative, neither overbought nor oversold. The STOCH value of 82.01 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MCHP.

Microchip Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MPWR	78 Outperform	$35.76B	19.83	67.95%	0.83%	30.57%	342.02%
STM	76 Outperform	$26.98B	25.62	6.33%	1.02%	-25.35%	-70.00%
NXPI	75 Outperform	$55.88B	23.85	26.02%	1.83%	-7.21%	-15.29%
SWKS	74 Outperform	$11.58B	30.14	6.70%	3.63%	-12.90%	-51.90%
ON	72 Outperform	$22.40B	38.81	7.85%	―	-18.28%	-70.98%
MCHP	64 Neutral	$38.66B	84.25	>-0.01%	2.54%	-42.35%	-100.12%
Sector *	59 Neutral	€3.18B	12.09	-9.91%	2.75%	2.38%	-49.53%

Microchip Corporate Events

Microchip Appoints Rick Cassidy to Board of Directors

On May 1, 2025, Microchip Technology Incorporated announced the appointment of Rick Cassidy, a senior executive from Taiwan Semiconductor Manufacturing Co. Ltd., to its Board of Directors, effective May 2, 2025. This appointment increases the board size from six to seven members, reflecting a strategic move to enhance corporate governance and strategy development.