Microchip Technology (MCHP) has followed the trend of several semiconductor stocks this earnings season. The company announced results for the December quarter that were in line with or better than expected, but predicted that sales and earnings for the March quarter would fall well below consensus estimates.
The Chandler, Ariz.-based company reported mixed results for the December quarter. During the fiscal third quarter ended Dec. 31, Microchip earned an adjusted $1.08 per share on sales of $1.77 billion. Analysts had projected earnings of $1.04 per share on sales of $1.77 billion. On a year-over-year basis, the company’s earnings fell 31% while sales dropped 19%.
For the current quarter, Microchip forecasts adjusted earnings of 57 cents per share on sales of $1.33 billion, based on the midpoint of its guidance. Wall Street had expected earnings of 92 cents per share on sales of $1.66 billion in the fiscal fourth quarter.
The company’s stock fell 1.6% to close at 84.29.
While the Philadelphia semiconductor index, known as SOX, rose 1.3% on Friday, it was down slightly for the week. The index includes the 30 largest semiconductor stocks traded in the U.S.
Several other chipmakers have also reported in-line or better December-quarter results with disappointing forecasts for the March quarter, including Allegro MicroSystems (ALGM), MaxLinear (MXL), and Wolfspeed (WOLF). These companies cited weakness in automotive, industrial, and telecom infrastructure markets as reasons for the decreased guidance.
According to Jordan Klein, managing director for tech, media, and telecom sector trading at Mizuho Securities, the downturn in industrial chip sales is “in full swing and sounds really bad.” He stated that no one knows when the market will hit bottom.
Last week, semiconductor stocks Intel (INTC) and Texas Instruments (TXN) also reported earnings that surpassed estimates for the fourth quarter, but lowered their guidance for the current quarter.
Despite an overall gloomy outlook, some AI chipmakers like Advanced Micro Devices (AMD) have been able to stand strong due to expected declines in chips for PCs, servers, and gaming. However, a positive outlook for data-center AI accelerators has helped buoy AMD stock.
Recent top-performing semiconductor stocks have been those affiliated with the artificial intelligence trend, such as AMD, Broadcom (AVGO), Marvell Technology (MRVL), and Nvidia (NVDA).
For more stories on consumer technology, software, and semiconductor stocks, follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz.
