What Happened?

Shares of chip designer Allegro MicroSystems (NASDAQ: ALGM) jumped 8.1% in the afternoon session after the company reported fourth-quarter 2025 results that featured a notable revenue beat and a robust outlook for the upcoming quarter. 

Revenue grew 28.9% year-over-year to $229.2 million, surpassing analyst expectations. However, the company's GAAP earnings per share of $0.04, while an improvement from a loss in the same period last year, fell just short of Wall Street's consensus of $0.05. Investors appeared to focus on the strong guidance, as Allegro projected revenue of approximately $235 million for the first quarter of 2026, which was ahead of analyst forecasts. The company also demonstrated improved profitability, with its operating margin increasing to 4.2% from 0% in the prior-year quarter, and generated positive free cash flow of $41.26 million.

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What Is The Market Telling Us

Allegro MicroSystems’s shares are extremely volatile and have had 33 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 6 days ago when the stock dropped 3.6% on the news that Intel reported disappointing earnings report and weak forecast for the current quarter. 

Shares of the chipmaker plunged about 12% after it posted a fourth-quarter loss and provided a softer-than-expected outlook. The company's first-quarter revenue projections of $11.7 billion to $12.7 billion fell short of analyst consensus. More concerning for the broader sector, Intel executives flagged industry-wide supply shortages as a significant problem that could persist into 2026, with supply capabilities expected to be at their lowest point in the first quarter. When a market leader like Intel signals such widespread issues, it often creates a ripple effect, raising investor concerns about the health and near-term prospects of the entire semiconductor industry.

Allegro MicroSystems is up 40.2% since the beginning of the year, and at $37.72 per share, has set a new 52-week high. Investors who bought $1,000 worth of Allegro MicroSystems’s shares 5 years ago would now be looking at an investment worth $1,351.

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