Microchip Technology Surges on Stronger-Than-Expected Quarterly Performance

US-listed Microchip Technology (NASDAQ: MCHP) surged 12.2% on Wednesday, driven by the company’s revised guidance and positive signals for an industry recovery. The specialty microcontroller manufacturer issued updated forecasts during a presentation at the UBS Global Technology and AI conference, signaling that its prolonged cyclical downturn may finally be reversing.

When the Cycle Turned

The semiconductor giant has endured one of the most severe demand collapses in its history. After experiencing a pandemic-fueled boom in industrial chip orders from automotive and clean energy sectors through 2023, Microchip faced a sharp cliff-off in demand. The correction proved both deeper and longer than management anticipated, with revenue declining significantly through 2024 and into 2025.

However, Wednesday’s announcement marked a pivotal inflection point. Management now expects December quarter revenue to land near the high end of prior guidance—with sequential growth of approximately 1% and year-over-year growth around 12%. This reversal came despite earlier guidance that predicted seasonal declines. Adjusted non-GAAP earnings now project $0.40 per share, up from the previous range of $0.34 to $0.40.

CEO Steve Sanghi remarked that with two-thirds of the quarter complete, business momentum exceeded internal expectations. Critically, the company noted strong bookings activity and improving backlog trends extending into March 2026—a meaningful signal that the recovery isn’t merely a one-quarter bounce.

Why This Matters for the Stock

Despite Wednesday’s rally, Microchip trades 37% below its all-time highs from 2023, and the stock remains up only 11% year-to-date. This valuation gap presents a potential opportunity if the cyclical recovery sustains.

The variance in analyst estimates for fiscal 2027 earnings is substantial, ranging from $1.62 to $3.87 per share. At present valuations, if actual results trend toward the upper end of that range, the stock could be underpriced. The company also offers a 3.2% dividend yield, providing income while awaiting the recovery thesis to play out.

Today’s guidance revision suggests that more bullish analyst assessments—those betting on a robust industrial cycle rebound—may be on firmer ground. The combination of improving sequential metrics, expanding backlog, and extended visibility into the next quarter represents the kind of early-cycle evidence that historically drives catch-up rallies in overlooked semiconductor names.