What Happened?
Shares of analog chipmaker Microchip Technology (NASDAQ: MCHP) jumped 6.8% in the afternoon session after Bank of America upgraded the stock to Buy from Neutral, pointing to signs of a recovery in the analog chip market.
The bank also lifted its price target on the shares to $95 from $78. The upgrade was based on early indications of an industrial recovery along with growing demand from data centers, aerospace, and autos. The broker noted that Microchip had the most earnings leverage among its peers as industrial demand rebounds, with nearly half of its revenue tied to industrial end markets. In a sign of increased confidence, Bank of America raised its 2026 and 2027 earnings estimates for the company by 8% and 13%, respectively.
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What Is The Market Telling Us
Microchip Technology’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 22 days ago when the stock gained 11.2% on the news that a broader market rally drove investor optimism in artificial intelligence and big tech stocks.
The S&P 500, Dow Jones, and Nasdaq all pushed higher, approaching record levels set late last year. Much of the positive momentum was linked to the technology sector, with a particular focus on companies advancing artificial intelligence, a key theme at the annual CES trade show in Las Vegas. This continued a powerful trend from 2025, when AI-related developments were a primary catalyst for the market's bull run. The upbeat sentiment was further supported by hopes for easier monetary policy from the Federal Reserve following a weaker-than-expected US Services PMI reading.
Microchip Technology is up 24.8% since the beginning of the year, and at $81.16 per share, has set a new 52-week high. Investors who bought $1,000 worth of Microchip Technology’s shares 5 years ago would now be looking at an investment worth $1,171.
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