Microchip Technology's stock experienced a significant 5.05% decline in post-market trading on Thursday. The sharp drop came following the release of the company's third-quarter financial results and accompanying business updates.
While the semiconductor company reported better-than-expected quarterly earnings with adjusted EPS of $0.44, surpassing analyst estimates, investors focused on the company's cautious forward guidance. Microchip Technology announced it has paused most factory expansion actions and reduced planned capital expenditures through 2026 due to a slow macroeconomic environment.
The company's fourth-quarter profit forecast of about 40 cents per share fell below Wall Street estimates of 48 cents, raising concerns about the impact of a global memory-supply crunch on the semiconductor industry. This cautious approach to future investments, despite the positive quarterly results, led to the substantial sell-off as traders reacted to the tempered growth outlook.