Microchip TechnologyMCHP late Thursday edged above Wall Street’s targets for its fiscal third quarter and guided higher than views for the current period. But Microchip stock slid in late trading.

The Chandler, Ariz.-based company earned an adjusted 44 cents a share on sales of $1.19 billion in the quarter ended Dec. 31. Analysts surveyed by FactSet had expected earnings of 43 cents a share on sales of $1.18 billion. On a year-over-year basis, Microchip earnings surged 120% while sales grew 16%.

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Microchip had raised its guidance for fiscal Q3 on Jan. 5, noting a broad-based recovery in most of its end markets.

Microchip makes smart, connected and secure embedded control systems for the industrial, automotive, aerospace and defense, consumer, communications and computing markets.

For the current quarter, Microchip expects to earn an adjusted 50 cents a share on sales of $1.26 billion. That’s based on the midpoint of its guidance. Wall Street was modeling earnings of 49 cents a share on sales of $1.23 billion in the fiscal fourth quarter. In fiscal Q4 last year, Microchip earned an adjusted 11 cents a share on sales of $970.5 million.

Microchip Stock Sinks After Report

In after-hours trading on the stock market today, Microchip stock dropped more than 5% to 73.45. During the regular session Thursday, Microchip stock dipped a fraction to close at 78.04.

On Jan. 22, Microchip stock hit a buy point of 77.20 out of a 27-week consolidation pattern, according to MarketSurge charts. Since then, it has traded in and out of the 5% buy zone.

“We believe the broad-based recovery across our end markets, combined with significant margin expansion, demonstrates the tangible impact of our nine-point recovery plan execution,” Chief Executive Steve Sanghi said in a news release.

He added, “Our non-GAAP gross margins have expanded significantly from 52% in the March 2025 quarter to 60.5% this quarter, reflecting the cumulative impact of our operational improvements. As we continue to normalize inventory and improve factory utilization, we expect our gross margins to expand further toward our long-term target of 65%.”

Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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