MCHP
Microchip Technology
Semiconductors
★ Quality 11/100Price today
$83.30
what the market pays
Worth
$26.19
calculated cycle value
Price is 218% above its value
charlieapp.co
Price vs Intrinsic Value
The line is the price month by month; the green band marks when it's undervalued (−20% off value). When the price drops in there, the discount is real, not opinion.
Where does the value come from?
5-year cycle
Money made year by year
This business has cycles — good years and bad years. That's why we don't use just the last year.
We use the average of those 5 years as the base for the math — not the good year, not the bad year. That way the value reflects what the company makes steadily.
How many times the cash flow
Semiconductors · vs 11 peers
You pay 21.3x times this business's cash flow; its sector median is 60.1x.
62% above what Charlie thinks it's worth (8.2x) — you're overpaying, sector or no sector.
Why Overvalued?
The model estimates an intrinsic value of $26.19 per share. Today's price of $83.30 is 69% above the calculated value — the market is paying a premium over what the model sees as fair.
The price is 218% above the calculated value. You're paying more than it's worth.
Buying here lowers your expected return and wipes out the safety margin.
The next reasonable entry zone starts at $24.88.
At what price would buying make sense?
Entry zones
🟢 Undervalued
≤$20.95
-20% off Value
🟡 Discounted
≤$24.88
-5% off Value
🔴 Today
$83.30
-69% Valor
Overvalued
The market prices it too high versus what the business makes. Patience pays off here.
“Time is the friend of the wonderful company, the enemy of the mediocre.”
— Warren Buffett
Model updated · July 2026
The business
Once their chip is in your design, divorce costs more than the marriage.
Microchip makes microcontrollers, analog chips, and FPGAs for automotive, industrial, and defense. It sells silicon designed into products for years; once your microcontroller is in the design, you keep buying. Revenue of $4.7B with 58% gross margin.
Real switching costs: redesigning an embedded system to swap chips costs time and engineering. Tens of thousands of customers, none critical. The moat exists, but it's not an impenetrable fortress — that's why we mark it as a non-strong moat.
Revenue history
From $6.8B to $4.7B in 4 years. Sales are shrinking — the engine is losing steam.
Where each $100 of sales goes
Revenue $4.7B · FY2026
Of every $100 in sales, $95 goes to costs and operations; $5 is left as net profit (5% margin).
Catalysts and risks
Cycle recovery: revenue rose from $4.4B (FY2025) to $4.7B (FY2026), the first uptick after the correction.
Channel inventory drawdown toward normal levels during 2026, restoring pricing power.
$5.5B in debt weighs; any deleveraging improves FCF available to shareholders.
$5.5B in debt against $0.2B in cash. Leverage bites hard at the bottom of the cycle.
Net income of just $0.2B on $4.7B of revenue: operating margins hit by inventory digestion.
Revenue CAGR of -9% over five years. The business shrank, it didn't grow.
Charlie's note
“At 8.2x with 58% gross margins, you pay little for a business that reinvents itself every time a customer redesigns their product; the -9% is the cycle breathing, not the moat breaking. With real switching costs and nobody critical among tens of thousands of customers, the virtue here is waiting for the cycle to finish coughing.”
Analysis · June 2026
So when would be a good price for Microchip Technology?
By our calculation, not yet. We will email you the day it drops to $24.88 — so you do not have to keep checking.
🔔 Email meFree · no card
Charlie informs, it doesn't advise. No information should be taken as a recommendation to buy or sell.