Microchip (MCHP) AI Stock Analysis

• Market Cap: $32.11B
• Dividend Yield: 3.07%
• Average Volume (3M): 6.89M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.89
• Revenue Growth: -35.70%
• EPS Growth: -113.08%
• Country: US
• Employees: 22,300
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.35
• Shares Outstanding: 539,679,700
• 10 Day Avg. Volume: 7,342,758
• 30 Day Avg. Volume: 6,886,189
• 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: 0.00
• Enterprise Value/Revenue: 0.00
• Enterprise Value/Gross Profit: 0.00
• Enterprise Value/Ebitda: 0.00
• 1Y Price Target: $74.76
• Price Target Upside: 25.96% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 21
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 49 Neutral
• Price Target: $59.00 ▼(-0.59% Downside)

Microchip's overall stock score is primarily impacted by its weak financial performance and valuation concerns. Technical analysis indicates bearish momentum, while the earnings call provides some optimism with strategic growth initiatives. However, the negative P/E ratio and profitability issues weigh heavily on the score.

Positive Factors

Product Innovation

The launch of the Model Context Protocol Server enhances Microchip's AI capabilities, positioning it to leverage AI trends and improve product integration, supporting long-term growth.

Strategic Focus

Focusing on advanced nodes and high-performance products aligns Microchip with industry trends, potentially boosting its competitive edge and market share over time.

Revenue Growth

Sequential revenue growth indicates recovery momentum and operational improvements, suggesting resilience and potential for sustained financial performance.

Negative Factors

Declining Profitability

Negative net profit margins reflect operational inefficiencies, which may hinder long-term profitability and require strategic cost management improvements.

Inventory Challenges

Significant inventory write-offs and underutilization charges suggest inefficiencies in inventory management, potentially affecting future profitability and operational efficiency.

Revenue Decline

A negative revenue growth rate indicates challenges in maintaining sales momentum, which could impact long-term market position and financial health.

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's financial performance is under pressure with declining revenue and profitability. The income statement shows negative growth and margins, while the balance sheet indicates improved leverage but negative ROE. Cash flow generation is challenged, though operational cash conversion remains efficient.

Income Statement

Microchip's income statement shows declining revenue with a negative growth rate of -3.77% in the TTM period, indicating challenges in maintaining sales momentum. The gross profit margin has decreased from previous years, and the net profit margin has turned negative, reflecting operational inefficiencies and potential cost management issues. The EBIT and EBITDA margins have also declined, suggesting reduced profitability.

Balance Sheet

The balance sheet reveals a moderate debt-to-equity ratio of 0.80 in the TTM period, which is an improvement from previous years, indicating better leverage management. However, the return on equity is negative, highlighting profitability challenges. The equity ratio remains stable, suggesting a balanced asset structure.

Cash Flow

Cash flow analysis shows a decline in free cash flow growth by -6.02% in the TTM period, indicating potential cash generation issues. The operating cash flow to net income ratio is strong, suggesting efficient cash conversion from operations. However, the free cash flow to net income ratio indicates a reliance on cash reserves to cover negative net income.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	4.24B	4.40B	7.63B	8.44B	6.82B	5.44B
Gross Profit	2.31B	2.47B	5.00B	5.70B	4.45B	3.38B
EBITDA	841.40M	1.04B	3.44B	4.10B	2.87B	1.83B
Net Income	-148.40M	-500.00K	1.91B	2.24B	1.29B	349.40M
Balance Sheet
Total Assets	14.98B	15.37B	15.87B	16.37B	16.20B	16.48B
Cash, Cash Equivalents and Short-Term Investments	566.50M	771.70M	319.70M	234.00M	319.40M	282.00M
Total Debt	5.49B	5.67B	6.03B	6.60B	7.85B	9.07B
Total Liabilities	8.12B	8.30B	9.22B	9.86B	10.30B	11.14B
Stockholders Equity	6.86B	7.08B	6.66B	6.51B	5.89B	5.34B
Cash Flow
Free Cash Flow	725.60M	772.10M	2.61B	3.13B	2.47B	1.82B
Operating Cash Flow	796.60M	898.10M	2.89B	3.62B	2.84B	1.92B
Investing Cash Flow	-199.20M	-287.80M	-392.10M	-599.50M	-477.70M	-173.30M
Financing Cash Flow	-346.00M	-158.30M	-2.41B	-3.10B	-2.33B	-1.86B

Microchip Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 59.35
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 Negative. The current price of 59.35 is below the 20-day moving average (MA) of 63.49, below the 50-day MA of 64.42, and below the 200-day MA of 59.88, indicating a bearish trend. The MACD of -1.26 indicates Positive momentum. The RSI at 37.01 is Neutral, neither overbought nor oversold. The STOCH value of 9.70 is Positive, 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	76 Outperform	$47.90B	25.54	64.03%	0.62%	30.48%	339.29%
SWKS	71 Outperform	$10.92B	23.85	7.89%	3.62%	-2.18%	-16.84%
ON	68 Neutral	$20.15B	63.68	3.87%	―	-16.13%	-81.06%
NXPI	65 Neutral	$51.45B	25.10	21.19%	1.96%	-6.81%	-23.16%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
STM	59 Neutral	$21.34B	41.17	3.00%	1.47%	-17.33%	-76.71%
MCHP	49 Neutral	$32.11B	―	-2.24%	3.07%	-35.70%	-113.08%

Microchip Corporate Events

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.

Microchip Elects New Board Members at Annual Meeting

At the annual meeting of stockholders held on August 19, 2025, Microchip‘s stockholders elected several individuals to the Board of Directors, including Ellen L. Barker, Rick Cassidy, Matthew W. Chapman, Victor Peng, Karen M. Rapp, and Steve Sanghi. Additionally, the appointment of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending March 31, 2026, was ratified. However, the proposal to approve the compensation of named executives on an advisory basis was not approved.

The most recent analyst rating on (MCHP) stock is a Hold with a $65.00 price target. To see the full list of analyst forecasts on Microchip stock, see the MCHP Stock Forecast page.

Microchip Technology’s Strong Q1 FY2026 Earnings Call

Microchip Technology’s latest earnings call for Q1 FY2026 painted a picture of robust performance and optimism for the future. The company reported significant sales growth and margin improvements, alongside successful efforts in inventory reduction. Despite facing some challenges, such as employee compensation issues and specific market lags, the overall sentiment was positive, with strong bookings and encouraging future guidance.

Microchip Technology Reports Strong Start to Fiscal 2026

Microchip Technology Incorporated, 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.