Microchip Technology (MCHP)
NASDAQInformation TechnologySemiconductorsSnapshot 2026-09-04
$74.17+1.45%
Close 2026-09-04 · 1-day change
NASDAQInformation TechnologySemiconductorsSnapshot 2026-09-04
Warn: Primary pillar under pressure — Gross margin stays above 60%: 63.2% vs 62.75%.
Microchip grows revenue to about $1.46 billion in Q4 2026. Gross margin stays above 60%. Profit margin is guided near 34%. The company controls capital spending below $100 million in 2026.
The recent sharp selloff shows risk. High valuation with a PE near 72 times pressures upside. Growth could slow below the 27% analysts expect. Capital spending discipline is mixed.
The price is about 18% above our fair value near $72 and well below the Street median near $120. The market expects about 27% revenue growth, which is aggressive given recent volatility and mixed capital allocation signals.
Breaks if: Capex exceeds $100 million in FY 2026
Breaks if: Gross margin falls below 60%
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
This investment represents a durable compounder with a focus on revenue growth and margin maintenance. The current thesis state is intact, supported by strong recent financial results despite a recent CEO transition.
The market currently views MCHP as expensive compared to its peers, with a premium of 0.76. There is an expectations gap, indicating that the market may not fully reflect the company's recent performance and growth potential.
Fundamentals are likely to remain strong, driven by management's focus on revenue growth and maintaining gross margins above 60%. However, there is a moderate risk due to the recent CEO transition and a low probability of missing future earnings guidance.
The long-term thesis hinges on management's ability to sustain revenue growth and margin expansion. Additionally, external factors such as potential Fed rate cuts and performance of sector leaders like NVDA, TSM, and AVGO will be crucial for MCHP's momentum.
The most important moves since the prior daily snapshot.
Yes, our read has strengthened. The company reported a strong earnings beat. Microchip Technology's revenue grew 38% year-on-year, exceeding expectations by 1.8%. The analog semiconductor sector also beat revenue estimates by 1.8%. This suggests strong demand for Microchip's products. There are no new threats to the thesis.
as of 2026-09-04
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
Sustain gross margin levels above 60% through operational improvements, product mix, and factory utilization enhancements.
Stated as a priority in 5 of last 5 quarters. Non-GAAP gross margin improved from about 52.0% in 2025-Q4 to 63.8% in 2026-Q2, exceeding guidance ranges. Management consistently targets gross margin above 60%, and the financials show delivering progress with margin expansion over the period.
“CEO: 'Non-GAAP gross margin of 55.9% reported, improving from prior quarters.'”
“CEO: 'Non-GAAP gross margin of approximately 62.25% to 63.25% expected for June quarter.'”
“CEO: 'Gross profit of 51.6% on GAAP basis, with non-GAAP gross profit of 52.0%.'”
“CEO: 'Gross profit of 54.7% GAAP and 55.4% non-GAAP.'”
“CEO: 'Gross profit of 57.4% GAAP and 59.5% non-GAAP.'”
Breaks if: Operating margin falls below 30%
Sustain gross margin levels above 60% through operational improvements, product mix, and factory utilization enhancements.
Stated as a priority in 5 of last 5 quarters. Non-GAAP gross margin improved from about 52.0% in 2025-Q4 to 63.8% in 2026-Q2, exceeding guidance ranges. Management consistently targets gross margin above 60%, and the financials show delivering progress with margin expansion over the period.
“CEO: 'Non-GAAP gross margin of 55.9% reported, improving from prior quarters.'”
“CEO: 'Non-GAAP gross margin of approximately 62.25% to 63.25% expected for June quarter.'”
“CEO: 'Gross profit of 51.6% on GAAP basis, with non-GAAP gross profit of 52.0%.'”
“CEO: 'Gross profit of 54.7% GAAP and 55.4% non-GAAP.'”
“CEO: 'Gross profit of 57.4% GAAP and 59.5% non-GAAP.'”
Breaks if: Revenue falls below $1.31 billion in Q4 2026
Overall, MCHP's strong recent performance and management priorities suggest a solid foundation for the next few years. Not investment advice.