Start here if you're new
what it is
Microchip sells the tiny chips that help cars, factories, and gadgets sense, compute, store data, and keep working.
how it gets paid
Last year Microchip Tech made $4.4B in revenue.
why growth slowed
Revenue fell 42.3% last year. EPS came in at $0.44 versus a $0.40 consensus marker in the provided data.
what just happened
Microchip beat on the quarter, with revenue at $1.19B versus roughly $1.17B expected.
At a glance
B+ balance sheet — decent shape, but not bulletproof
45/100 earnings predictability — expect surprises
41.9x trailing p/e — you're paying up for this one
2.8% dividend yield — cash in your pocket every quarter
31.0% return on capital — every dollar works hard here
xvary composite: 57/100 — below average
What they do
Microchip sells the tiny chips that help cars, factories, and gadgets sense, compute, store data, and keep working.
These chips sit deep inside customer designs, where changing suppliers means new testing, new software work, and fresh regulatory checks. Switching costs (cost to leave → redesign pain → customers stay put) are real when you serve 100,000+ customers across industrial and automotive markets. That stickiness helps support a 31.0% return on capital.
How they make money
$4.4B
annual revenue · revenue declined -42.3% last year
total revenue
$4.4B
42.3%
The products that matter
embedded control chips
Microcontrollers
$3.4B revenue base
this is the center of gravity in the snapshot: a $3.4B revenue base supporting 27.3% net margin and 28% return on equity.
core
interface and power chips
Mixed-Signal & Analog
part of the $3.4B base
the segment detail is thin here, but it sits inside the same $3.4B business that recovered 53.5% last year. That matters because valuation assumes the rebound keeps spreading.
profit support
memory and IP option
Flash-IP Solutions
next to a $35B market cap
this is the least proven part of the page. We kept it because it is in the source set, but the hard number you have is still the same one: a $35B company being judged on a $3.4B revenue base.
thin data
Key numbers
31.0%
return on capital
Return on capital → profit earned on each dollar invested → so what: this business still throws off strong economics even in a downturn.
$5.4B
long-term debt
Long-term debt → money owed over many years → so what: debt is 13% of capital, which looks manageable unless the recovery breaks.
2.8%
dividend yield
Dividend yield → cash paid to you while you wait → so what: you get income today, and dividend growth ran 17.0% historically.
41.9x
trailing p/e
P/E → how much you pay for each dollar of earnings → so what: you are paying a rich price for a company still rebuilding earnings.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 35 / 100
- long-term debt $5.4B (13% of capital)
- net profit margin 32.6% — keeps 33 cents of every dollar in revenue
- return on equity 44% — $0.44 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in MCHP 3 years ago → it's now worth $8,410.
The index would have given you $14,540.
source: institutional data · total return
What just happened
beat estimates
Microchip beat on the quarter, with revenue at $1.19B versus roughly $1.17B expected.
EPS came in at $0.44 versus a $0.40 consensus marker in the provided data. Management also pointed to a 4% sequential sales increase in the December quarter and guided another 5%-8% upturn for March.
$1.19B
revenue
$0.44
eps
56.5%
gross margin
the number that mattered
The key number was the 4% sequential revenue increase, because it says the inventory mess is easing and customers are ordering again.
-
sales at microchip technology are on the rebound.in addition to enjoying strong bookings of late, the company has benefited from significant reductions in inventory at customers and distributors. this means that sales at microchip are tracking much closer to end market demand than was the case earlier.
-
most recently, the top line increased 4% sequentially in the december quarter, to nearly $1.2 billion, a notable achievement given the usual seasonal slowdown during that time of the year.from an end market perspective, aerospace and defense has provided the biggest boost, though the improvement appears to be relatively broad based.
-
the company anticipates another 5%-8% upturn in revenues for the march period, and management has expressed some optimism that the momentum can continue into the opening quarters of fiscal 2026, which begins april 1st.
-
earnings ought to remain in recovery mode.
-
for the final quarter of fiscal 2025, management is targeting per-share profits of $0.48-$0.52, which would represent a sequential improvement of 9%-18%.
source: company earnings report, 2026
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What could go wrong
the #1 risk is the embedded-chip recovery stalling before valuation catches down.
med
recovery expectations are already in the price
41.9x trailing earnings is a demanding multiple for a stock with 45/100 earnings predictability and a three-year result of $8,410 on a $10,000 starting point.
If quarterly improvement stalls, the re-rating does not need to be dramatic to hurt you. The stock is already priced for better numbers ahead.
med
Asia concentration and channel exposure
Asia is the largest reported exposure at $1.7B, and Arrow Electronics adds another $340M of channel concentration. Trade friction, customer pauses, or distributor caution would show up quickly.
This matters because the source data already points to concentration before you even layer on the normal semiconductor cycle.
med
margin pressure would break the quality argument
A roughly 40% operating margin and 27.3% net margin make the business look high quality. In semiconductors, those numbers can compress fast when pricing or utilization moves the wrong way.
If margin falls while revenue is still rebuilding, you lose both parts of the story: the quality premium and the recovery premium.
When the stock trades at 41.9x earnings and the reported 3–5 year target midpoint is $54, the company has to keep delivering clean recovery prints. There is not much room for a sloppy quarter.
source: institutional data · regulatory filings · risk analysis
Pay attention to
next checkpoint
march-quarter revenue guide
management guided for 5%–8% growth. If the next report lands below that range, the recovery case weakens immediately.
metric
operating margin around 40%
that margin is doing a lot of work in the story. If it slips while revenue improves, the rebound is lower quality than it looks.
trend
bookings and distributor inventory
recent optimism came from stronger bookings and lower customer inventory. You want to see that trend continue, not reverse after one clean quarter.
risk
institutional sellers
381 buyers versus 471 sellers in 4q2025 is not panic, but it is not broad conviction either. A third straight net-selling quarter would say plenty.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts see a normal setup here, not a screaming short-term edge.
risk profile
average
stability score 3 — middle-of-the-road risk, which matters more when earnings predictability is only 45/100.
chart momentum
top 5%
technical score 1 — the chart is strong right now. The quiet part is that chart strength and fundamental certainty are not the same thing.
earnings predictability
45 / 100
expect a bumpier earnings path than the average blue-chip stock. That's awkward when valuation already assumes smoother progress.
source: institutional data
Institutional activity
institutions have been net selling for 2 consecutive quarters — 381 buyers vs. 471 sellers in 4q2025. total institutional holdings: 0.5B shares. net selling for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$22
$86
$65
current price
$54
target midpoint · 17% from current · 3-5yr high: $110 (+70% · 16% ann'l return)
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