By Nate Wolf

Shares of Microchip Technology rose Tuesday after the chip maker lifted its sales guidance for the quarter ended Dec. 31, 2025.

Microchip estimated net sales for its fiscal third quarter were around $1.19 billion, roughly 4% higher than in the second quarter. The company in November originally forecast sales of $1.11 billion to $1.15 billion before revising its estimate to the top end of that range last month.

Microchip stock surged 4.3% to $69.96 in premarket trading Tuesday. The company -- which makes analog semiconductors that power everything from cars to electronics -- will report official third-quarter earnings on Feb. 5.

"We continue to experience a fairly broad-based recovery in most of our end markets," said CEO Steve Sanghi in a statement. "Our bookings activity was very strong in the December quarter despite a holiday filled quarter."

Sanghi added that the company has successfully reduced its inventory and was preparing to increase production in the current quarter, which will begin to lower the costs of under-utilizing its factories.

The reduction in Microchip's under-utilization charge should help the company expand its gross profit margin, said Needham analyst N. Quinn Bolton in a research note Tuesday. The firm reiterated a Buy rating on the stock and boosted its price target to $77 from $75.

Analysts at Citi have been bullish on the analog semiconductor industry for months and think Microchip will benefit from an "analog upturn in [2026] given low inventory, low supply growth, and depressed margins." Christopher Danely of Citi reiterated a Buy rating and an $80 price target in a note.

Among fellow chip makers, Texas Instruments stock was up 0.9% Tuesday and Qualcomm rose 0.6%. Shares of ON Semiconductor jumped 2% to $59.87.

The Citi team, however, reiterated a Neutral rating and a $56 price target for ON Semi after a recent investor dinner with the company's management. "The company characterized the current environment as stable and seasonal," Danely wrote, but "overall business conditions remain muted."

Write to Nate Wolf at nate.wolf@barrons.com

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January 06, 2026 07:43 ET (12:43 GMT)

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