Microchip Technology stock drops 4% as Q3 guidance trails estimates

Chandler, Arizona - Microchip Technology Inc. (MCHP) posted strong Q2 earnings per share of $0.97, surpassing analyst estimates by $0.04, but its stock slipped 4% after delivering weaker-than-expected guidance for Q3. The company reported $1.62 billion in revenue, a 42.2% year-over-year increase, surpassing the $1.61 billion forecast.

However, Microchip's guidance for third-quarter earnings of $1.573 billion to $1.638 billion fell short of the $1.62 billion consensus estimate. For Q3, the company expects adjusted EPS of $0.87 to $0.95, a 9.2% sequential rise in net sales to $1.622 billion, and a 66.5% adjusted gross margin. Microchip's President and CEO, Steve Sanghi, noted that strong start-of-fiscal-2027 momentum continued in the September quarter, driven by industrial and data center applications.

The decline in guidance is partly attributed to $53 million in infrequent revenue items that will not recur. Microchip declared a quarterly dividend of 45.5 cents per share, payable on December 8 to shareholders of record on November 23.