Microchip (MCHP) AI Stock Analysis

• Market Cap: $40.36B
• Dividend Yield: 2.42%
• Average Volume (3M): 7.86M
• Price to Earnings (P/E): 84.3
• Beta (1Y): 1.89
• Revenue Growth: -42.35%
• EPS Growth: -100.12%
• Country: US
• Employees: 22,300
• Sector: Technology
• Sector Strength: 94
• Industry: Semiconductors
• EPS (TTM): 0.11
• Shares Outstanding: 539,674,560
• 10 Day Avg. Volume: 6,836,622
• 30 Day Avg. Volume: 7,859,544
• 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: 1.04
• Enterprise Value/Revenue: 1.98
• Enterprise Value/Gross Profit: 17.06
• Enterprise Value/Ebitda: 5.86
• 1Y Price Target: $75.05
• Price Target Upside: -0.28% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 21

• Rating: 64 Neutral
• Price Target: $69.00 ▼(-8.32%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

Bookings and Demand

Disti sell-through increased for the first time in 2 years, indicating a positive shift in demand.

Financial Guidance

Microchip announced raised financial guidance for the Jun Q as recovery accelerates even as restructuring is tracking well.

Product Portfolio Expansion

The merger with Microsemi has significantly broadened Microchip's product portfolio and market share, especially in growth areas.

Negative Factors

Inventory and Margins

Gross margin fell 308 basis points QoQ to 51.6%, below estimates due to lower utilization.

Microcontroller Segment

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

Revenue Growth Concerns

Some 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 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 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: 75.26
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 75.26 is above the 20-day moving average (MA) of 73.09, above the 50-day MA of 66.93, and above the 200-day MA of 60.22, indicating a bullish trend. The MACD of 2.42 indicates Positive momentum. The RSI at 65.78 is Neutral, neither overbought nor oversold. The STOCH value of 50.05 is Neutral, 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
NXPI	78 Outperform	$57.07B	24.36	23.11%	1.78%	-7.53%	-21.88%
MPWR	78 Outperform	$34.72B	19.25	67.95%	0.78%	30.57%	342.02%
STM	76 Outperform	$29.33B	27.80	6.32%	0.92%	-25.47%	-70.07%
ON	72 Outperform	$25.37B	42.00	7.85%	―	-18.28%	-70.98%
SWKS	70 Outperform	$10.92B	28.42	6.70%	3.82%	-12.90%	-51.90%
Sector *	68 Neutral	¥227.94B	14.57	7.50%	2.72%	9.28%	6.70%
MCHP	64 Neutral	$40.36B	84.25	>-0.01%	2.42%	-42.35%	-100.12%

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.