Microchip Called The Bottom... But What Will The Bounce Look Like?

Microchip’s (MCHP) CEO Stephen Sanghi has never been what you might call shy or retiring, but his call for the March quarter being the bottom of this cycle still got plenty of attention. In the case of Microchip, it may well be true, though there are caveats related to trade talks between the U.S. and China and not so much certainty on what the shape of the post-bottom bounce is going to look like.

I liked Microchip back in mid-September and the 10%-plus return since then has meaningfully outperformed semiconductors in general, as well as more MCHP-relevant comps like STMicroelectronics (STM), Infineon (OTCQX:IFNNY), Texas Instruments (TXN), and NXP (NXPI). While I do think there are still attractive revenue and margin drivers in play here, I’m not quite as bullish as I was before and I think there are other names to consider in the MCU/analog/FPGA space.

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Microchip Called The Bottom... But What Will The Bounce Look Like?