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Arizona-based Microchip Technology Incorporated (MCHP), with a market cap of $40.3 billion, operates in the analog semiconductor industry. It designs key components for electronics, producing microchips for sectors like automotive and communications.
Companies worth $10 billion or more are generally described as "large-cap stocks," and Microchip fits right into that category with its market cap exceeding this threshold, reflecting its substantial size and influence in the chip sector. Microchip Technology's Total System Solutions (TSS) combine hardware, software, and services, positioning it as a key player in 5G, IoT, and EV markets, driving customer loyalty and recurring revenue.
Despite its strengths, Microchip is trading 23% lower than the 52-week high of $100.57, achieved on May 24. Moreover, MCHP has plunged 17.2% in the past three months, underperforming the broader Dow Jones Industrial Average Index’s ($DOWI) 5.5% return over the same time frame.
Over the longer term, MCHP is down 14.1% on the YTD basis and 2.5% over the past 52 weeks, significantly trailing behind the DOWI’s 8.4% gains in 2024 and 17.9% returns over the past 52 weeks.
MCHP’s recent price trend looks bearish. The stock has been trading below its 200-day moving average since early August and under its 50-day moving average since mid-July.
MCHP fell more than 3% on Sept. 6 as part of a broader selloff in semiconductor stocks, triggered by Broadcom Inc.’s (AVGO) weaker-than-expected Q4 revenue forecast. The negative sentiment spread across the sector, with several major chip companies also seeing significant declines.
Moreover, the stock fell more than 6% on Sept. 3, as chip stocks plunged across the board, weighing down the overall market.
Adding to that, MCHP stock dropped by 5% after the company released its Q1 earnings on Aug. 1. Its net sales were down 45.8% year over year to $1.2 billion, and its net income dropped 80.6% annually to $129.3 million.
To emphasize the stock’s underperformance, MCHP has underperformed its competitor Analog Devices, Inc. (ADI), which rose 13.4% on a YTD basis and 26.7% over the past 52 weeks.
Despite its underperformance compared to DOWI, analysts are bullish about MCHP’s prospects. The stock holds a consensus rating of “Strong Buy” from 22 analysts covering it, and the mean target of $96.28 is a premium of 24.3% from current levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
