Microchip Sinks 10% on Soft December Guidance as CEO Says “Data Center Is in the Bubble”

What happened

Microchip Technology (MCHP) guided December-quarter sales 1% lower at the midpoint after Thursday's close, below the $1.63 billion analysts expected, and the stock fell 10% today on the soft guidance. Asked on Thursday's call whether an AI data-center bubble could hurt Microchip, CEO Steve Sanghi said "data center is in the bubble," noting data center is 16.7% of sales, so Microchip "should outperform" companies that are "kind of all data center." No other cause is stated in the source. September's $1.622 billion of sales included about $53 million of one-time revenue; excluding it, management says the December guide is 5% to 7% better than its normal seasonal drop. Sanghi said "Lead times are lengthening across our supply chain": data-center demand has been taking capacity at the assembly and test houses Microchip uses, and Microchip paused most of its own factory expansion in the downturn. Texas Instruments, which sells to the same industrial and auto customers and credits its own 300mm production, guided December sales about flat at $6.05 billion, and NXP guided sales up 2%, so the squeeze looks like Microchip's own. Astera Labs (ALAB) saw its PCIe Gen6 switch and retimer design wins double to 24 last quarter; Astera guided December revenue to $730 million to $750 million, from $584.9 million, and its February report will show whether a second supplier dents its 72.4% non-GAAP gross margin. Before the report, analysts expected normalized EPS to more than double this fiscal year to $3.66; the December EPS guide is $0.04 short of estimates. Microchip traded at 16x forward earnings at Thursday's close against a five-year average of 26x, and about 14x at today's price.

Impact and signal

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Source and time

Source: Yahoo Finance — TXN · 11/6/2026 · View original source