What Happened?
Shares of analog chipmaker Microchip Technology (NASDAQ: MCHP) jumped 11.8% in the afternoon session after the company reported strong first quarter 2025 results with revenue guidance for next quarter topping analysts' expectations. In addition, EPS outperformed Wall Street's estimates.
Management said that the March quarter marked the bottom of the ongoing industry downcycle, reinforced by improved bookings in April and the first positive book-to-bill ratio in nearly three years. That's usually a good sign that demand is starting to come back.
Despite this, sales were down 27% from the previous year, though still ahead of analysts' estimates. For next quarter, Microchip sees sales climbing significantly, a strong sign of recovery taking hold. Overall, we think this was a solid quarter with some key areas of upside.
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What The Market Is Telling Us
Microchip Technology’s shares are quite volatile and have had 19 moves greater than 5% over the last year. But moves this big are rare even for Microchip Technology and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock dropped 10.3% on the news that the company provided updated guidance for the December 2024 quarter, with expectations for revenue to be close to the low end of its previous forecast of $1.025 to $1.095 billion. Also, the company closed its Tempe wafer fabrication facility due to elevated inventory levels and ample capacity.
Microchip Technology is down 3.4% since the beginning of the year, and at $54.95 per share, it is trading 44.8% below its 52-week high of $99.49 from May 2024. Investors who bought $1,000 worth of Microchip Technology’s shares 5 years ago would now be looking at an investment worth $1,244.
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