MCHP Should I Buy
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Microchip Technology Inc (MCHP) is not a strong buy at this moment for a beginner investor with a long-term strategy. While the company has shown revenue growth and improved gross margins, its net income and EPS have significantly declined. Insider selling activity and a lack of strong proprietary trading signals further suggest caution. The stock's technical indicators are mixed, and the options data reflects a neutral to slightly bullish sentiment. Given these factors, it is better to hold off on buying until clearer positive catalysts emerge.
The stock's MACD is negative and contracting, indicating bearish momentum. RSI is neutral at 57.193, showing no clear overbought or oversold conditions. Moving averages are bullish (SMA_5 > SMA_20 > SMA_200), but the pre-market price is slightly below the pivot level of 78.04, suggesting limited upward momentum in the short term.
The company has raised $800 million through convertible senior notes, which will improve its capital structure. Analysts have raised price targets, with several maintaining Buy or Outperform ratings. Revenue growth of 15.59% YoY and improved gross margins are also positive signs.
Net income and EPS have significantly declined (-165.11% and -160.00% YoY, respectively). Insider selling has increased by over 4258% in the last month, which may indicate a lack of confidence from within the company. The pre-market price is slightly down (-0.16%), and proprietary trading signals are absent.
In Q3 2026, revenue increased by 15.59% YoY to $1.186 billion, and gross margin improved by 18.14% YoY to 50.53%. However, net income dropped by -165.11% YoY to $34.9 million, and EPS fell by -160.00% YoY to $0.06, indicating profitability challenges.
Analysts have mixed views. Several firms, including Needham, Mizuho, and Evercore ISI, raised price targets and maintained Buy or Outperform ratings, citing improving demand and strong gross margins. However, others like TD Cowen and Truist remain cautious with Hold ratings, highlighting gradual recovery and limited upside.
