What Happened?
Shares of analog chipmaker Microchip Technology (NASDAQ: MCHP) jumped 11% in the afternoon session after the company raised its financial guidance for its third fiscal quarter, citing stronger-than-expected business performance, bookings, and backlog. Microchip now expected its net sales and earnings per share to be at the high end of its previously provided range. This revised outlook represented an approximate 12% year-over-year growth in revenue. The company also anticipated non-GAAP earnings per share to be about $0.40, surpassing prior estimates. The CEO stated that business was performing better than expected with booking activity remaining strong. In addition to the upgraded forecast, the company also announced the launch of new energy-efficient power monitors designed to reduce power consumption by 50% in portable devices.
The shares closed the day at $63.61, up 12.2% from previous close.
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What Is The Market Telling Us
Microchip Technology’s shares are very volatile and have had 24 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 previous big move we wrote about was 13 days ago when the stock dropped 2.7% on the news that markets faded the Nvidia rally in the morning session, as investors remained uncertain about future rate cuts.
While the trading day began with significant enthusiasm, pushing the Dow Jones Industrial Average up more than 700 points and the Nasdaq Composite up 2.6%, momentum quickly evaporated as the session wore on. The primary catalyst for this sharp reversal was a stronger-than-expected jobs report, which reduced the implied odds of a December interest rate cut to less than 40%. This macroeconomic anxiety overshadowed stellar corporate performance. Nvidia initially surged 5% on blockbuster earnings and CEO Jensen Huang's bullish outlook on "off the charts" demand for Blackwell chips. However, the stock eventually turned negative, acting as a heavy weight that dragged the broader indices into the red. The sell-off partly reflects a deepening caution regarding high-flying tech valuations in a "higher-for-longer" rate environment.
Consequently, investors appeared to rotate capital away from volatile growth sectors and toward defensive staples, evidenced by Walmart's 6% gain following its own earnings beat. Ultimately, the market could not sustain the morning's euphoria, as traders prioritized rate realities over AI potential.
Microchip Technology is up 11.8% since the beginning of the year, but at $63.58 per share, it is still trading 15.5% below its 52-week high of $75.26 from July 2025. Investors who bought $1,000 worth of Microchip Technology’s shares 5 years ago would now be looking at an investment worth $918.06.
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