Microchip to Report Q3 Earnings: What's in Store for the Stock?

Core Insights - Microchip Technology (MCHP) is expected to report third-quarter fiscal 2026 results on February 5, 2026, with net sales projected between $1.109 billion and $1.149 billion, indicating a sequential decline of approximately 1% at the midpoint, while year-over-year growth is estimated at 15.5% [1][2] Financial Performance - Non-GAAP earnings per share are anticipated to range from 34 cents to 40 cents, with the consensus estimate at 43 cents per share, reflecting a significant year-over-year growth of 115% [2] - MCHP has beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 0.00% [2] Inventory and Production - The company has successfully reduced its inventory levels from a peak of 266 days to 199 days over three quarters, which is expected to continue positively impacting the upcoming results [3] - Distributor inventory levels were reduced to 27 days in the second quarter of fiscal 2026, and MCHP has scaled back its capital expenditures while maintaining sufficient manufacturing capacity to support production growth [4] Market Demand - Strong demand for Gen 4 and Gen 5 data center products, driven by inventory corrections among customers and increased AI data center build-outs, is anticipated to positively influence MCHP's third-quarter results [5][9] - The company is benefiting from strong design wins in high-growth sectors such as industrial, aerospace, and automotive, which is expected to enhance revenue performance [6] Earnings Prediction - The earnings model indicates a high likelihood of an earnings beat for MCHP, supported by a positive Earnings ESP of +1.34% and a Zacks Rank of 1 (Strong Buy) [7][8]