Microchip Technology Incorporated (NASDAQ:MCHP) saw its stock climb Tuesday after the semiconductor company updated its fiscal third-quarter 2026 revenue forecast to a figure higher than previously communicated.
In a statement released Monday, Microchip reported that it now anticipates net sales for the period ending December 31, 2025, to be approximately $1.185 billion. This revised sales estimate marks an increase over the earlier guidance range of $1.109 billion to $1.149 billion provided on November 6, 2025, as well as the updated expectation from December 2, 2025, which had suggested net sales would reach the upper bound of that range.
Complementing the revenue revision, the company also adjusted its third-quarter adjusted earnings per share (EPS) forecast. The new guidance sets EPS at roughly 40 cents, elevated from the prior range of 34 cents to 40 cents, aligning closely with market consensus estimates.
Executive Insights on Market Conditions
Steve Sanghi, who serves as Microchip Technology’s CEO and president, described a widespread rebound in demand across the company’s major end markets. This improvement, Sanghi noted, is underpinned by progress in resolving inventory corrections both within distribution channels and customer stock levels. Furthermore, he observed that new customer design wins are transitioning into production phases.
"We continue to experience a fairly broad-based recovery in most of our end markets driven by progress we have made in inventory correction in distribution as well as direct customers, and with new customer designs turning to production," Sanghi stated.
Despite the typical seasonal slowdown during the holiday period, Sanghi emphasized that booking activity remained robust throughout the December quarter. This momentum contributed to the company entering the March quarter with a substantially larger starting backlog than it had at the beginning of the December quarter, signaling stronger demand outlooks moving forward.
Progress on Strategic Initiatives and Operational Efficiency
In reviewing internal performance metrics, Sanghi highlighted meaningful advances in Microchip’s ongoing turnaround efforts. The company has made progress on the majority of components within its comprehensive nine-point recovery plan, as well as broader strategic initiatives aimed at strengthening business fundamentals.
"We have made substantial progress on most elements of our nine-point recovery plan as well as our strategic initiatives," Sanghi remarked.
A key operational priority has been the reduction of internal inventory levels, which have decreased significantly. This inventory drawdown is expected to mitigate the need for future inventory write-offs, contributing to financial stability. Concurrently, preparations are underway to accelerate production ramp-ups in the March quarter. Increasing factory output is anticipated to address current under-utilization charges by better aligning manufacturing capacity with demand.
Financial Reporting and Market Performance
Microchip Technology plans to publicly release its fiscal third-quarter 2026 financial results on February 5, 2026.
Following the announcement, Microchip’s shares experienced a notable increase in premarket trading on Tuesday, rising by 4.31% to reach $69.95 according to Benzinga Pro data.