Earnings Call
Aug 6, 2026
Q2 FY2026
EPS Estimate
0.70
EPS Actual
0.76
Post-Earnings Close
$84.69
Earnings Reaction
+13.9%
Microchip's fiscal second quarter 2026 results showed a company navigating the final stages of a prolonged inventory correction while laying the groundwork for what management believes will be a multi-quarter recovery. Net sales of $1.14 billion came in $10.4 million above the midpoint of guidance, up 6% sequentially, with MCU revenue growing 9.7% and analog up 1.7%. Non-GAAP EPS of $0.35 beat the guided midpoint by $0.02. The headline numbers, however, continue to be heavily distorted by two transitory charges: $71.8 million in new inventory write-offs and $51 million in underutilization charges, which together knocked 10.8 percentage points off what was otherwise a 67.4% product gross margin, leaving reported non-GAAP gross margin at 56.7%. The path to Microchip's 65% long-term gross margin target runs directly through the normalization of these two line items, and management's confidence that the company is in the 'eighth or ninth inning' of this cycle is the central investment thesis on the call.
Report generated on Aug 7, 2026
AI-generated earnings analysis. Not investment advice.
Chief Executive Officer
The quarter's results reflected a combination of company-specific execution and broader sector dynamics, with management addressing several of the key debates that analysts had flagged heading into the print. Guidance commentary pointed to continued momentum in the core segments, while questions on margins and capital allocation drew more nuanced responses from the leadership team over the course of the call.
The quarter's results reflected a combination of company-specific execution and broader sector dynamics, with management addressing several of the key debates that analysts had flagged heading into the print. Guidance commentary pointed to continued momentum in the core segments, while questions on margins and capital allocation drew more nuanced responses from the leadership team over the course of the call.
The quarter's results reflected a combination of company-specific execution and broader sector dynamics, with management addressing several of the key debates that analysts had flagged heading into the print. Guidance commentary pointed to continued momentum in the core segments, while questions on margins and capital allocation drew more nuanced responses from the leadership team over the course of the call.
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