Microchip Technology Shares Drop 6% After Q3 Guidance Falls Short of Estimates
Chandler, Ariz. – Microchip Technology Incorporated (NASDAQ: MCHP), a leading semiconductor manufacturer, experienced a 6% decline in its share price following the release of its third-quarter guidance, which came in below Wall Street expectations, despite reporting a slightly better-than-expected adjusted earnings for the second quarter.
For the quarter ending September 30, 2025, Microchip reported an adjusted earnings per share (EPS) of $0.35, surpassing analyst estimates by $0.01. The company’s revenue reached $1.14 billion, aligning with consensus forecasts but reflecting a 2.0% decrease year-over-year. Sequentially, revenue improved by 6.0% compared to the previous quarter.
However, Microchip’s outlook for the third quarter tempered investor enthusiasm. The company forecasted revenue in the range of $1.109 billion to $1.149 billion, falling short of the analysts’ consensus estimate of $1.18 billion. The guidance for adjusted EPS was between $0.34 and $0.40, with a midpoint of $0.37, slightly below the expected $0.39 per share.
Steve Sanghi, Microchip’s CEO and President, commented on the results, stating, “Our Q2 results demonstrate continued momentum in our recovery, with net sales growing 6% sequentially and exceeding the midpoint of our guidance. The operational improvements we implemented translated into meaningful financial progress even as the broader market recovery is proceeding slower than anticipated.”
The company also highlighted positive operational indicators, including a 10% sequential increase in orders for the September quarter and a book-to-bill ratio of 1.06. An increased acceleration in customer orders suggests ongoing normalization of inventory levels.
In a noteworthy technological development, Microchip introduced the industry’s first PCIe Gen 6 3nm switch targeting artificial intelligence (AI) and enterprise data center applications, marking a milestone in the company’s innovation efforts.
Microchip also declared a quarterly dividend of 45.5 cents per share.
Despite these operational strengths, Microchip issued cautious guidance given the historically weak seasonal performance in December, which contributed to the guidance falling short of market expectations and the subsequent stock price decline.
Investors continue to weigh the company’s progress against broader market uncertainties as Microchip navigates the evolving semiconductor industry landscape.
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