Microchip (MCHP) AI Stock Analysis

• Market Cap: $35.08B
• Dividend Yield: 2.8%
• Average Volume (3M): 9.59M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.92
• 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: 9,259,103
• 30 Day Avg. Volume: 9,594,596
• 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: 1.15
• Enterprise Value/Revenue: 9.54
• Enterprise Value/Gross Profit: 19.05
• Enterprise Value/Ebitda: 52.43
• 1Y Price Target: $74.67
• Price Target Upside: 15.04% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16
• EPS Forecast (FY): 1.45
• Revenue Forecast (FY): $4.55B

• Rating: 54 Neutral
• Price Target: $58.00 ▼(-10.65% Downside)

Microchip's overall stock score reflects significant profitability challenges and a concerning valuation. Despite strong cash flow and strategic growth prospects highlighted in the earnings call, the stock faces bearish technical indicators and operational challenges. Improvement in profitability and revenue growth are critical for a positive outlook.

Positive Factors

Strong Cash Flow

Microchip's ability to generate strong cash flow despite profitability challenges indicates robust liquidity and operational efficiency, supporting long-term financial stability and investment capacity.

Strategic Product Innovation

The introduction of energy-efficient digital power monitors showcases Microchip's commitment to innovation, potentially enhancing its competitive edge in power-sensitive applications and expanding market opportunities.

Inventory Management Improvement

Effective inventory management enhances operational efficiency and reduces costs, positioning Microchip for better profitability and responsiveness to market demand.

Negative Factors

Declining Revenue

Significant revenue decline indicates challenges in market demand or competitive positioning, potentially impacting long-term growth and financial health if not addressed.

Profitability Challenges

Negative profit margins highlight operational inefficiencies and cost management issues, which could hinder Microchip's ability to reinvest in growth and innovation.

Inventory Write-offs

Significant inventory write-offs and underutilization charges reflect inefficiencies in production planning and demand forecasting, potentially straining future profitability.

Microchip Business Overview & Revenue Model

Company Description

Microchip Technology Incorporated (MCHP) is a leading provider of microcontroller and analog semiconductor solutions, serving a diverse range of industries including automotive, industrial, consumer, and aerospace. Founded in 1989 and headquartered in Chandler, Arizona, the company specializes in embedded control applications, offering a wide portfolio of products including microcontrollers, analog ICs, memory products, and development tools. Microchip's innovative technologies are designed to enhance performance, efficiency, and reliability 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 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

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: Positive
• Last Price: 64.91
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

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 64.91 is above the 20-day moving average (MA) of 61.42, above the 50-day MA of 60.29, and above the 200-day MA of 59.84, indicating a bullish trend. The MACD of 2.25 indicates Negative momentum. The RSI at 58.83 is Neutral, neither overbought nor oversold. The STOCH value of 14.45 is Positive, 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	76 Outperform	$44.89B	23.93	64.03%	0.62%	30.48%	339.29%
ON	73 Outperform	$22.22B	72.05	3.87%	―	-16.13%	-81.06%
SWKS	70 Outperform	$9.62B	21.03	7.89%	4.36%	-2.18%	-16.84%
NXPI	70 Neutral	$56.95B	27.79	21.19%	1.79%	-6.81%	-23.16%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
STM	57 Neutral	$23.15B	45.39	3.00%	1.29%	-17.33%	-76.71%
MCHP	54 Neutral	$35.08B	-143.73	-2.85%	2.80%	-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.