Microchip (MCHP) AI Stock Analysis

• Market Cap: $41.09B
• Dividend Yield: 2.79%
• Average Volume (3M): 9.01M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.91
• Revenue Growth: -23.36%
• EPS Growth: -131.15%
• Country: US
• Employees: 22,300
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.44
• Shares Outstanding: 541,135,440
• 10 Day Avg. Volume: 7,173,880
• 30 Day Avg. Volume: 9,006,770
• 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: 1.12
• Enterprise Value/Revenue: 10.52
• Enterprise Value/Gross Profit: 20.40
• Enterprise Value/Ebitda: 51.85
• 1Y Price Target: $87.68
• Price Target Upside: 16.18% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 20
• EPS Forecast (FY): 1.57
• Revenue Forecast (FY): $4.66B

• Rating: 58 Neutral
• Price Target: $77.00 ▲(2.03% Upside)
• Action: Reiterated Date: 02/12/26
• Date: Action: Reiterated 02/12/26

The score is held back primarily by weakened GAAP profitability (TTM loss and margin compression) despite solid free cash flow and manageable—though still meaningful—leverage. Offsetting that, the latest earnings call points to a tangible recovery with strong revenue and non-GAAP margin/EPS guidance, while technicals show a medium-term uptrend but neutral near-term momentum. Valuation is constrained by the negative P/E, partially balanced by a ~2.45% dividend yield.

Positive Factors

Resilient free cash flow

Sustained positive and growing free cash flow is a durable strength: it funds debt paydown, dividends and targeted R&D/capex without relying on equity, improving financial flexibility as earnings recover and supporting multi-quarter deleveraging and strategic investments.

Strong design-win and product momentum

Meaningful design wins and automotive/data-center collaborations underpin durable revenue visibility; wins with OEMs and hyperscalers expand high-value content per system and create multi-year revenue streams as customers migrate to new standards and nodes.

High non‑GAAP gross margins and margin recovery guidance

Elevated gross margins driven by product mix and foundry-produced, high-margin products support sustainable operating leverage. Management’s guided margin recovery implies structural improvement in profitability as capacity/utilization normalize and higher-margin products scale.

Negative Factors

Elevated leverage

Material leverage at current earnings levels limits flexibility: servicing debt requires consistent cash generation and margin recovery. Elevated net debt/EBITDA constrains buybacks, forces prioritization of debt repayment over growth investments, and raises refinancing risk if earnings slip.

Deteriorated GAAP profitability

A move to TTM GAAP losses and sharply compressed operating margins erodes return on capital and stresses the economics of the business. Persistent GAAP weakness increases dependence on non‑GAAP adjustments and makes sustained dividend or investment increases riskier absent a clear earnings rebound.

High inventory & underutilization charges; supply limits

Large inventory days, fresh reserves and capacity underutilization charges reduce near-term margins and indicate demand/mix and fab-utilization mismatches. Multi-year fab ramp and substrate/foundry constraints could limit fulfillment and margin expansion as the company scales higher‑margin products.

Microchip Business Overview & Revenue Model

Company Description

Microchip Technology Incorporated develops, manufactures, and sells smart, connected, and secure embedded control solutions in the Americas, Europe, and Asia. The company offers general purpose 8-bit, 16-bit, and 32-bit microcontrollers; 32-bit embedded microprocessors markets; and specialized microcontrollers for automotive, industrial, computing, communications, lighting, power supplies, motor control, human machine interface, security, wired connectivity, and wireless connectivity applications. It also provides development tools that enable system designers to program microcontroller and microprocessor products for specific applications; field-programmable gate array (FPGA) products; and analog, interface, mixed signal, and timing products comprising power management, linear, mixed-signal, high-voltage, thermal management, discrete diodes and metal oxide semiconductor field effect transistors (MOSFETS), radio frequency (RF), drivers, safety, security, timing, USB, Ethernet, wireless, and other interface products. In addition, the company offers memory products consisting of serial electrically erasable programmable read-only memory, serial flash memories, parallel flash memories, serial static random access memories, and serial electrically erasable random access memories for the production of very small footprint devices; and licenses its SuperFlash embedded flash and NVM technologies to foundries, integrated device manufacturers, and design partners for use in the manufacture of microcontroller products, gate array, RF, analog, and neuromorphic compute products that require embedded non-volatile memory, as well as provides engineering services. Further, it offers wafer foundry and assembly, and test subcontracting manufacturing services; and timing systems products, application specific integrated circuits, and aerospace products. Microchip Technology Incorporated was incorporated in 1989 and is headquartered in Chandler, Arizona.

How the Company Makes Money

Microchip generates revenue primarily through the sale of its semiconductor products, including microcontrollers, analog devices, and memory products. The company operates on a business-to-business model, selling to original equipment manufacturers (OEMs) and other industrial clients. Key revenue streams include direct sales from product lines, royalties from licensing its technology, and service agreements that provide ongoing support and development for clients. Additionally, Microchip has formed significant partnerships and collaborations with technology leaders and industry players, enhancing its market reach and driving sales through joint product offerings and integrated solutions. The company's focus on research and development also allows it to innovate continuously, meeting the evolving demands of its customer base, which further contributes to its earnings.

Microchip Financial Statement Overview

Summary

Financials show a clear down-cycle: the income statement is the main drag (TTM net loss and sharply compressed EBIT margin despite ~50% gross margin). Offsetting that, the balance sheet is moderately leveraged (debt-to-equity ~0.81) and cash flow remains resilient with solid positive and growing free cash flow (~$820M TTM), supporting flexibility while earnings recover.

Income Statement

Profitability has deteriorated meaningfully. In TTM (Trailing-Twelve-Months), revenue is up modestly (+3.8%), but net income is negative (net margin about -4.4%) and operating profitability is very thin (EBIT margin ~1.2%), well below prior years. The company still maintains a solid gross margin (~50%), but the sharp drop from FY2023–FY2024 levels and the move from strong profits in FY2022–FY2024 to losses in TTM point to significant margin compression and a weaker earnings profile.

Balance Sheet

Leverage looks manageable but not light for the current earnings level. In TTM (Trailing-Twelve-Months), debt is about $5.37B against equity of ~$6.56B (debt-to-equity ~0.81), an improvement versus earlier years when leverage was higher. However, returns have turned negative in TTM (negative return on equity), indicating the balance sheet is being supported by past profitability while current-period earnings are under pressure—raising the importance of an earnings rebound to keep leverage comfortably serviced.

Cash Flow

Cash generation remains a relative strength despite weaker earnings. In TTM (Trailing-Twelve-Months), operating cash flow is ~$911M and free cash flow is ~$820M, with free cash flow growing ~8.7% versus the prior period, signaling resilient cash conversion. The main weakness is that operating cash flow coverage is below 1x in recent periods, consistent with reduced cash generation compared with the strong FY2022–FY2024 cycle, but overall free cash flow remains solidly positive and supportive of financial flexibility.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	4.37B	4.40B	7.63B	8.44B	6.82B	5.44B
Gross Profit	2.25B	2.47B	5.00B	5.70B	4.45B	3.38B
EBITDA	887.00M	1.04B	3.44B	4.10B	2.87B	1.83B
Net Income	-96.60M	-500.00K	1.91B	2.24B	1.29B	349.40M
Balance Sheet
Total Assets	14.33B	15.37B	15.87B	16.37B	16.20B	16.48B
Cash, Cash Equivalents and Short-Term Investments	250.70M	771.70M	319.70M	234.00M	319.40M	282.00M
Total Debt	5.40B	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	6.56B	7.08B	6.66B	6.51B	5.89B	5.34B
Cash Flow
Free Cash Flow	819.90M	772.10M	2.61B	3.13B	2.47B	1.82B
Operating Cash Flow	911.00M	898.10M	2.89B	3.62B	2.84B	1.92B
Investing Cash Flow	-199.40M	-287.80M	-392.10M	-599.50M	-477.70M	-173.30M
Financing Cash Flow	-1.05B	-158.30M	-2.41B	-3.10B	-2.33B	-1.86B

Microchip Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 75.47
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCHP, the sentiment is Neutral. The current price of 75.47 is below the 20-day moving average (MA) of 77.26, above the 50-day MA of 72.63, and above the 200-day MA of 65.69, indicating a neutral trend. The MACD of 1.04 indicates Positive momentum. The RSI at 49.47 is Neutral, neither overbought nor oversold. The STOCH value of 16.32 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MCHP.

Microchip Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MPWR	75 Outperform	$58.14B	95.19	17.94%	0.62%	30.48%	339.29%
NXPI	67 Neutral	$59.29B	29.34	21.01%	1.79%	-6.81%	-23.16%
ON	64 Neutral	$27.59B	208.75	1.47%	―	-16.13%	-81.06%
SWKS	64 Neutral	$9.01B	23.03	6.49%	4.37%	-2.18%	-16.84%
STM	64 Neutral	$30.40B	178.65	0.93%	1.28%	-17.33%	-76.71%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
MCHP	58 Neutral	$41.09B	―	-1.09%	2.79%	-23.36%	-131.15%

Microchip Corporate Events

Microchip Issues Convertible Notes to Optimize Capital Structure

On February 9–11, 2026, Microchip Technology issued $900 million of 0% Convertible Senior Notes due 2030 in a private Rule 144A placement, generating net proceeds of about $883.3 million after fees. The notes, which are senior unsecured obligations with an initial conversion price of roughly $104.17 per share, were sold to qualified institutional buyers, with Microchip retaining the option to settle conversions in cash, stock or a mix.

The company used approximately $68 million of the proceeds to purchase capped call transactions with dealers, setting an initial cap at $148.82 per share to mitigate dilution and potential cash outlays upon conversion. Microchip plans to apply the remaining funds to repay borrowings under its commercial paper program, effectively terming out short‑term debt and fine‑tuning its capital structure while managing future equity dilution for existing shareholders.

The most recent analyst rating on (MCHP) stock is a Hold with a $69.00 price target. To see the full list of analyst forecasts on Microchip stock, see the MCHP Stock Forecast page.