Microchip Technology's stock experienced a significant after-hours plunge of 5.97% on Thursday, following the release of the company's third-quarter financial results and accompanying business updates.

The sharp decline appears to be driven by the company's announcement that, due to a slow macroeconomic environment in 2025, it has paused most factory expansion actions and reduced planned capital expenditures through 2026. This cautious approach to future investments, despite reporting better-than-expected quarterly earnings, has raised concerns among investors about the company's growth prospects in the challenging economic climate.

Microchip Technology reported third-quarter adjusted earnings per share of $0.44, exceeding analyst estimates of $0.43, and announced a quarterly cash dividend of 45.5 cents per share. However, the decision to scale back expansion plans and capital spending overshadowed these positive financial results, leading to the substantial after-hours sell-off.