Microchip to Report Q2 Earnings: What's in Store for the Stock?

Microchip Technology MCHP is set to report second-quarter fiscal 2026 results on Nov. 6.

Microchip expects net sales to be between $1.110 billion and $1.150 billion for the second quarter of fiscal 2026, implying roughly 5.1% sequential growth. Non-GAAP earnings are anticipated to be 30-36 cents per share.

The Zacks Consensus Estimate for second-quarter fiscal 2026 revenues is pegged at $1.13 billion, indicating a year-over-year decline of 2.74%.

The consensus mark for fiscal second-quarter earnings is pegged at 33 cents per share, unchanged over the past 30 days, suggesting a 28.26% year-over-year decline.

Microchip Technology Incorporated Price and EPS Surprise

Microchip Technology Incorporated price-eps-surprise | Microchip Technology Incorporated Quote

Microchip’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in the remaining one, delivering an average surprise of 0.23%. 

Let us see how things might have shaped up for MCHP prior to the announcement:

Key Factors to Note for MCHP’s Q2 Results

Microchip has been suffering from persistent macroeconomic weakness and limited visibility. However, the company’s second-quarter fiscal 2026 results are likely to reflect improving inventory levels, which reached 214 days in the first quarter of fiscal 2026 and have reduced over the past two quarters. Microchip expects inventory days between 195 and 200 days at the end of the fiscal second quarter.

Improving inventory is expected to have benefited gross margin in the to-be-reported quarter. Revenues are expected to have benefited from inventory correction at distributors and an increase in direct customer shipments. 

Microchip benefits from strong design wins, particularly in the industrial, aerospace, and automotive sectors, which is noteworthy. The company’s focus on high-growth areas like aerospace, defence, and AI, with innovations in microcontrollers, PCIe switches, and AI tools, is boosting adoption across automotive, industrial, and AI/ML markets. This is expected to have boosted revenues in the to-be-reported quarter.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the exact case here.

Microchip has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Affirm AFRM currently has an Earnings ESP of +3.53% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Affirm shares have risen 18.4% year to date. AFRM is set to report first-quarter fiscal 2026 results on Nov. 06.

Bill Holdings BILL has an Earnings ESP of +0.85% and a Zacks Rank of 2 at present. 

Bill Holdings shares have lost 42% year to date. BILL is set to report first-quarter 2026 results on Nov. 6.

Cisco Systems CSCO presently has an Earnings ESP of +1.91% and a Zacks Rank #3. 

Cisco Systems shares have risen 25.7% year to date. CSCO is scheduled to report first-quarter 2026 results on Nov.12. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research