Update shared on04 Sep 2025
Analysts maintain a cautious outlook on Microchip Technology, citing near-term demand strength and potential cyclical recovery offset by margin pressures and rich valuations, resulting in an unchanged consensus price target of $76.92.
Analyst Commentary
- Bullish analysts anticipate cyclical recovery in the analog semiconductor sector over the next 12–18 months, seeing valuation upside and robust AI-driven demand, especially for companies with well-managed supply chains.
- Near-term performance is being bolstered by tariff-related pull-ins, stronger-than-expected demand in DRAM and analog verticals, and constructive industry feedback, though concerns remain about sustainability into the second half of the year.
- Some caution persists due to ongoing margin headwinds, including underutilization charges and inventory write-downs, limiting gross margin recovery despite positive booking and demand trends.
- The industrial and automotive segments show mixed but improving data points, and China remains a resilient geography, though growth is slowing.
- Several analysts note that while gross margin expansion and operational improvements are positive, much of this is already reflected in valuations, with some recommending holding rather than chasing the stock at current levels.
What's in the News
- The White House is considering reallocating at least $2B from the CHIPS Act, shifting funds from semiconductor research and plant construction (including companies like Microchip) to support critical minerals projects and reduce U.S. dependence on China (Reuters, Aug 21, 2025).
- The Commerce Department is evaluating taking non-voting equity stakes in semiconductor companies, including Microchip Technology, as part of CHIPS Act grant distributions (Reuters, Aug 20, 2025).
- TD Cowen lowered Microchip’s price target to $60 from $75, citing margin pressures from underutilization and inventory write-downs despite favorable bookings and demand trends.
- Microchip Technology recently reappointed a previous CEO, joining a growing trend of "boomerang CEOs" among S&P 1500 companies, as boomerang hires reach a 10-year high (Financial Times, Jul 28, 2025).
- Microchip remains exposed to policy volatility as the U.S. government considers new semiconductor tariffs, freezes certain export curbs to China, and prepares to release results of a chip imports national security probe (Bloomberg, FT, Reuters, Jul-Aug 2025).
Valuation Changes
Summary of Valuation Changes for Microchip Technology
- The Consensus Analyst Price Target remained effectively unchanged, at $76.92.
- The Consensus Revenue Growth forecasts for Microchip Technology remained effectively unchanged, at 15.9% per annum.
- The Discount Rate for Microchip Technology remained effectively unchanged, at 10.74%.
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.