Citi analysts named Microchip Technology as their favorite for 2026

Citi named Microchip Technology (MCHP) as its top pick for 2026. Analysts expect the company to deliver the most growth over forecasts as Microchip Technology 's sales and margins have declined the most from peak levels, according to Seeking Alpha.

Citi estimates that Microchip Technology 's earnings per share will more than quadruple from $0.24 in the third quarter of 2025 to $1.33 by the fourth quarter of 2027, according to Seeking Alpha.

The company specializes in microcontrollers and analog chips. Insider Monkey notes that Microchip Technology has lagged far behind most semiconductor companies this year: its chips are widely used in industrial systems rather than in advanced artificial intelligence equipment, which affects the company's performance. Over the past six months, Microchip Technology's securities have fallen nearly 6%.

However, that began to change after the company updated its outlook for the third quarter of fiscal 2026, which ends Dec. 31, Insider Monkey notes.

The chipmaker on Dec. 2 raised its revenue and earnings per share forecast for the third quarter of fiscal 2026. The revised forecast beat Wall Street's expectations, Insider Monkey reported.

The company now expects revenue and earnings per share to be at the top end of the range of previously projected numbers. This implies growth of about 1% quarter-on-quarter - better than Microchip Technology officials' previous expectations, which suggested a decline, Insider Monkeypoints out . The company's management also said that the updated guidance reflects revenue growth of about 12% year-over-year.

"Our business is performing better than we expected at the time of our November 6, 2025 earnings conference call. Order activity remained strong through November, backlog in the current quarter is filling better than expected and growing well in the quarter ending March 2026," said Microchip President and CEO Steve Sanghi (quoted in Insider Monkey).

On December 16, Mizuho analyst Vijay Rakesh raised their target price on shares of Microchip Technology from $75 to $80 and maintained an "Outperform" rating on the stock, Insider Monkey reports.

However, the company still faces pressure in the automotive and industrial electronics markets. According to Mizuho, sales of such cars in the U.S. fell 20-50% month-over-month in October and November after the U.S. eliminated a rebate for electric car buyers, creating additional challenges for chip suppliers in that segment, Insider Monkey reports. Canceled and delayed launches expected in 2026 could add to that pressure, the publication notes.

On December 23, Microchip Technology shares lost more than 1%. On December 22, they closed in plus by 2%. According to MarketWatch, the average analyst rating on the chipmaker's securities is Overweight, and the consensus target price is $74.91, which implies a potential upside of about 14% from the current level.

19 analysts recommend to buy shares of Microchip Technology, ten advise to hold them. None of the analysts watching the company's securities at the moment advise to sell them, according to MarketWatch.

Among other favorites in the market, Citi analysts name Broadcom (AVGO), Analog Devices (ADI), Micron Technology (MU), NXP Semiconductors (NXPI) and Texas Instruments (TXN). All of these companies have been assigned a Buy rating by analysts, Seeking Alpha notes.

In 2026, Citi analysts believe rapid growth in AI will continue, but warn that the balance of risks and rewards is becoming less favorable. As OpenAI-related costs emerge in the second half of 2026, high market volatility is likely, Citi notes, emphasizing that concerns about the debt used to finance the AI infrastructure build-out will also grow among investors, Seeking Alpha reports.

This article was AI-translated and verified by a human editor