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Microchip Technology Incorporated (MCHP), headquartered in Chandler, Arizona, with a market cap of $31.8 billion, is a global leader in embedded control solutions. Known for its expertise in developing and delivering microcontrollers, analog devices, and flash-IP solutions, Microchip is committed to driving innovation, enhancing connectivity, and empowering industries worldwide with cutting-edge technology tailored to meet diverse application needs.
Companies valued at over $10 billion are typically classified as “large-cap stocks,” a category that Microchip Technology underscores its significant size and influence within the semiconductor industry. Through its Total System Solutions (TSS), Microchip seamlessly integrates hardware, software, and services, establishing itself as a pivotal force in markets like 5G, IoT, and electric vehicles (EVs). This holistic approach fosters customer loyalty and drives recurring revenue, solidifying its leadership in embedded control solutions.
Microchip Technology shares are currently trading 38.5% below their 52-week high of $100.57, hit on May 24. Over the past three months, the stock has declined 18%, significantly underperforming the Technology Select Sector SPDR Fund (XLK), which rose 15.4% during the same period.
Over the longer term, MCHP stock has declined 28.1% over the past 52 weeks and is down 31.4% on a YTD basis, underperforming the XLK, which has gained 24.3% YTD and delivered a 28.2% return over the past year.
To confirm the recent bearish trend, MCHP has traded below its 50-day moving average since late October and below its 200-day moving average since late July.
Microchip Technology faced significant challenges on Dec. 3, as shares declined 7% following a downward revision to its Q3 revenue guidance to approximately $1.025 billion, the low end of its prior range, citing slower-than-expected orders. The company also announced plans to close its Tempe, Arizona, wafer fabrication facility (Fab 2) by Q3 2025, targeting $90 million in annual cash savings and addressing elevated inventory levels by consolidating production in Oregon and Colorado.
This follows the company’s fiscal Q2 2025 earnings release on Nov. 5, which saw shares gain modestly. Net sales for the quarter were $1.164 billion, slightly above the midpoint of guidance but representing a 6.2% sequential decline and a sharp 48.4% drop year-over-year. Non-GAAP metrics included a gross profit margin of 59.5%, operating income of $340.8 million, and net income of $250.2 million, with earnings per share of $0.46, aligning with the upper end of guidance expectations.
MCHP has underperformed its competitor Analog Devices, Inc. (ADI), which rose 10.3% on a YTD basis and 18.5% over the past 52 weeks.
Despite its recent weak price performance, analysts remain optimistic about Microchip Technology’s prospects. The stock holds a consensus "Strong Buy" rating from 22 covering analysts, with a mean price target of $85.14, indicating a potential upside of 37.6% from its current level.
