Microchip Technology (NASDAQ:MCHP) Announces Quarterly Earnings Results

Key Points

• Quarterly results topped expectations: Microchip reported adjusted EPS of $0.97 versus $0.94 expected and revenue of $1.62 billion, up 42.2% year over year. Results included about $53 million in one-time revenue.
• Near-term outlook is softer: December-quarter revenue is expected to be flat to down 3% sequentially, with gross margin forecast at 64%–65%, below September’s 66.5%, amid supply constraints and higher costs.
• Demand and data-center growth offer support: Bookings remained strong and backlog increased, while data-center sales topped $250 million; management sees that business reaching $1 billion in calendar 2026.

Microchip Technology (NASDAQ:MCHP - Get Free Report) released its quarterly earnings data on Thursday. The semiconductor company reported $0.97 earnings per share for the quarter, topping the consensus estimate of $0.94 by $0.03, FiscalAI reports. The firm had revenue of $1.62 billion for the quarter, compared to the consensus estimate of $1.61 billion. Microchip Technology had a net margin of 9.34% and a return on equity of 14.97%. The business's revenue was up 42.2% on a year-over-year basis. During the same quarter in the prior year, the company posted $0.35 earnings per share.

Here are the key takeaways from Microchip Technology's conference call:

• September-quarter sales rose 42.2% year over year to $1.622 billion, and non-GAAP EPS of $0.97 beat the guidance midpoint by $0.04. Results included about $53 million of one-time revenue that the company does not expect to recur in December.
• Bookings remained strong, the book-to-bill ratio was well above one, and backlog entering December was higher than entering September. Management cited broad growth across industrial, aerospace and defense, automotive, and other markets, while warning that supply constraints are delaying some shipments.
• December-quarter revenue guidance is flat to down 3% sequentially at the midpoint, with non-GAAP gross margin expected at 64%–65%, below September’s 66.5%. The company cited the absence of one-time revenue, constrained shipments of high-margin products, lower utilization, and rising supplier costs.
• Data-center sales exceeded $250 million in September, and Microchip said its data-center business is on track for $1 billion in calendar 2026. It reported 24 Gen 6 PCIe switch and retimer design wins, with shipments expected to ramp as more designs enter production next year; management noted volumes could be affected if data-center investment slows.
• Net debt declined despite funding the Hailo acquisition, and leverage was 2.36 times trailing adjusted EBITDA; management expects leverage to keep falling. The company plans to maintain its dividend for now and revisit capital returns as it moves into the next fiscal year.

Microchip Technology Stock Performance

Shares of NASDAQ MCHP traded down $10.49 during midday trading on Thursday, reaching $64.85. The company's stock had a trading volume of 43,901,145 shares, compared to its average volume of 11,534,264. Microchip Technology has a 12-month low of $48.52 and a 12-month high of $105.91. The firm has a 50 day moving average price of $75.19 and a 200-day moving average price of $79.48. The stock has a market capitalization of $35.21 billion, a P/E ratio of 45.94, a PEG ratio of 0.52 and a beta of 1.84. The company has a debt-to-equity ratio of 0.83, a current ratio of 1.92 and a quick ratio of 1.11.

Insider Activity

In related news, CFO James Bjornholt sold 4,112 shares of the stock in a transaction that occurred on Tuesday, August 25th. The stock was sold at an average price of $75.32, for a total transaction of $309,715.84. Following the completion of the sale, the chief financial officer directly owned 28,573 shares of the company's stock, valued at approximately $2,152,118.36. This trade represents a 12.58% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. 1.79% of the stock is currently owned by corporate insiders.

Analysts Set New Price Targets

A number of equities research analysts recently weighed in on the stock. Cantor Fitzgerald restated an "overweight" rating on shares of Microchip Technology in a report on Wednesday, September 9th. Citigroup cut their target price on Microchip Technology from $113.00 to $95.00 and set a "buy" rating on the stock in a research report on Friday, August 7th. B. Riley Financial decreased their price target on Microchip Technology from $108.00 to $98.00 and set a "buy" rating for the company in a report on Thursday, October 22nd. BMO Capital Markets started coverage on Microchip Technology in a research report on Friday, August 21st. They issued an "outperform" rating and a $95.00 price target for the company. Finally, Rosenblatt Securities reaffirmed a "buy" rating and set a $120.00 price objective on shares of Microchip Technology in a report on Friday, August 7th. Three equities research analysts have rated the stock with a Strong Buy rating, thirteen have assigned a Buy rating and eight have issued a Hold rating to the company. According to data from MarketBeat.com, the stock presently has an average rating of "Moderate Buy" and a consensus price target of $97.71.

About Microchip Technology

Microchip Technology Incorporated NASDAQ: MCHP develops and manufactures semiconductor products used in embedded control and connected electronic systems. Its portfolio includes microcontrollers, microprocessors, analog and power-management devices, memory products, timing and connectivity components, security solutions, and field-programmable gate arrays. The company also provides development tools, software, evaluation kits, and technical support to help customers design and produce electronic equipment.

Microchip's products are used across a range of markets, including automotive, industrial, aerospace and defense, communications, consumer electronics, data centers, and medical applications.

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