Barclays Sees Microchip Technology (MCHP) Less Sensitive to Industrial Demand Swings

Vardah Gill

Mon, February 23, 2026 at 11:14 AM GMT+9 2 min read

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Microchip Technology Incorporated (NASDAQ:MCHP) is included among the 13 Best NASDAQ Dividend Stocks to Buy Now.

Barclays Sees Microchip Technology (MCHP) Less Sensitive to Industrial Demand Swings

On February 12, Barclays analyst Tom O’Malley initiated coverage of Microchip Technology Incorporated (NASDAQ:MCHP) with an Equal Weight rating. The analyst set an $80 price target on the stock. He said the company has a “more moderate correlation” with the Purchasing Managers’ Index compared with ON Semiconductor (ON), meaning its business is somewhat less sensitive to swings in industrial demand.

Barclays added that it is “cautiously optimistic” about a recovery in the industrial sector as PMIs begin to improve. Even so, the firm advised investors to stay selective, noting that each company in the space “faces at least one unique challenge.” In Microchip’s case, Barclays believes the company could face pressure from potential market share losses in microcontrollers.

During the fiscal Q3 2026 earnings call, CEO Steve Sanghi said Microchip delivered solid growth. Net sales rose 4% sequentially and increased 15.6% compared with the same quarter last year. He said the gains were largely driven by strength in networking, data center, FPGA, and licensing. Sanghi also said inventory levels at distributors had mostly returned to normal. The gap between sell-in and sell-through narrowed significantly, signaling improved balance across the supply chain. He added that aerospace and defense were the strongest-performing segments during the quarter, while networking, data center, and licensing continued to show steady momentum.

He also highlighted new product traction. The company secured three design wins for its PCI Express Gen 6 switch. Sanghi noted that the second win was larger and is expected to move into production in the first calendar quarter of 2027. Based on current customer forecasts, he said this design win alone could generate more than $100 million in revenue during calendar year 2027.

Microchip Technology Incorporated (NASDAQ:MCHP) provides embedded control solutions used in a wide range of industries. Its semiconductor business designs and sells microcontrollers, development tools, analog and connectivity products, timing solutions, and memory devices.

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