Key Stats for Microchip Stock
- Price Change for Microchip stock: 11.7%
- $MCHP Share Price as of Jan. 6: $75
- 52-Week High: $77
- $MCHP Share Price Target: $76
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What Happened?
Microchip (MCHP) stock jumped nearly 12% on Tuesday after the semiconductor company significantly raised its revenue guidance for the fiscal third quarter ending December 31, 2025.
The embedded control solutions provider now expects net sales of approximately $1.185 billion, well above its original forecast of $1.109 billion to $1.149 billion issued on November 6.
This marks the second guidance increase in less than a month. On December 2, Microchip had already revised expectations to the high end of its original range. The latest upward revision suggests accelerating momentum as the company exits a prolonged inventory correction cycle.
CEO Steve Sanghi pointed to a broad-based recovery across most end markets, driven by two key factors: progress in clearing excess inventory held by both distributors and direct customers, and new customer designs moving into production.
Despite the holiday-heavy December quarter, the company saw very strong bookings activity throughout the period.
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What the Market Is Telling Us About MCHP Stock
The surge in Microchip stock reflects growing investor confidence that the long-awaited inflection point in the semiconductor industry has finally arrived.
After more than two years of inventory corrections and weak demand in automotive and industrial markets, the company is seeing tangible signs of recovery.
Sanghi highlighted that the March quarter backlog started out “much better” than what Microchip saw at the start of the December quarter, suggesting momentum is building rather than stalling.
This is encouraging, given that investors had worried that customers might push orders further into the future.
MCHP also addressed two significant drags on profitability. First, internal inventory has dropped substantially, which will reduce inventory write-off charges that have been hitting gross margins.
Second, Microchip plans to ramp factory production in the March quarter, which will lower the underutilization charges that totaled about $50 million in recent quarters.
During recent investor conferences, management emphasized that November was the strongest bookings month in over three years, surpassing even the strong September and October results.
More importantly, customers are pulling orders in rather than pushing them out, with some January backlog being accelerated into December to meet demand.
The recovery appears broad-based rather than concentrated in a few areas. While data center and aerospace/defense businesses have been consistently strong, automotive and industrial markets now seem to be joining the recovery.
Even the consumer business, which had been hurt by tariff uncertainty, is stabilizing as companies resign themselves to the new trade environment and return to normal operations.
For Microchip stock investors, the company’s nine-point recovery plan appears to be working. With inventory corrections nearing completion, new designs ramping to production, and factory utilization improving, the stage is set for meaningful earnings leverage in 2026.
Management’s confidence was evident in Sanghi’s closing remarks: “We look forward to a very good calendar year 2026, as we reap the benefits from the success of our nine-point recovery plan.”
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
