Microchip Technology (MCHP): Valuation Check After Guidance Raise, New Power Monitors and Fresh Analyst Upgrades

Microchip Technology (MCHP) is back in focus after the company raised its third quarter guidance, pointing to stronger bookings and backlog, while also rolling out power monitors aimed at cutting energy use in portable devices.

See our latest analysis for Microchip Technology.

That stronger outlook seems to be feeding into sentiment, with the stock delivering a roughly 27.5 percent 1 month share price return and a healthier 1 year total shareholder return of about 20.6 percent. This suggests momentum is gradually rebuilding after a choppy few quarters.

If Microchip’s rebound has your attention, this could be a good moment to explore other chip names and high growth peers using high growth tech and AI stocks.

With analysts lifting price targets and guidance moving higher even as the broader chip sector wobbles, the key question is whether Microchip still trades at a discount or if the market is already baking in its next leg of growth.

Most Popular Narrative: 12.2% Undervalued

With Microchip Technology last closing at $64.91 against a narrative fair value of $73.92, the story frames the stock as having meaningful upside, supported by a detailed long term recovery thesis.

The accelerating adoption of edge computing and proliferation of AI enabled, connected devices is fueling demand for Microchip's portfolio of microcontrollers, analog, and FPGA solutions including recent design wins in AI/data center infrastructure and the expansion into secure, power efficient edge AI products supporting incremental revenue opportunities as these trends continue.

Read the complete narrative.

Curious how a still loss making chipmaker ends up with a premium style profit multiple and double digit growth path, even after recent guidance cuts and policy noise, driving that higher fair value.

Result: Fair Value of $73.92 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistently elevated inventories and muted automotive demand could delay margin recovery and undermine the upbeat 2026 earnings narrative investors are leaning on.

Find out about the key risks to this Microchip Technology narrative.

Another View: Market Multiples Signal Caution

While the narrative points to upside, the market’s own yardstick is less generous. Microchip trades on a price to sales ratio of 8.3 times, richer than the US semiconductor average of 5.3 times and its fair ratio of 8.2 times. This hints at limited margin for disappointment if recovery stutters.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Microchip Technology Narrative

If you see the outlook differently or would rather lean on your own analysis, you can build a complete Microchip story in minutes using Do it your way.

A great starting point for your Microchip Technology research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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