Analog chipmaker Microchip Technology (NASDAQ:MCHP) will be reporting earnings tomorrow after market close. Here’s what investors should know.

Microchip Technology met analysts’ revenue expectations last quarter, reporting revenues of $1.24 billion, down 45.8% year on year. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its operating margin.

Is Microchip Technology a buy or sell going into earnings? Read our full analysis here, it’s free.

This quarter, analysts are expecting Microchip Technology’s revenue to decline 48.9% year on year to $1.15 billion, a reversal from the 8.7% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.43 per share.

The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Microchip Technology has missed Wall Street’s revenue estimates four times over the last two years.

Looking at Microchip Technology’s peers in the analog semiconductors segment, some have already reported their Q3 results, giving us a hint as to what we can expect. Impinj delivered year-on-year revenue growth of 46.4%, beating analysts’ expectations by 2.5%, and Monolithic Power Systems reported revenues up 30.6%, topping estimates by 3.3%. Impinj traded down 13.1% following the results while Monolithic Power Systems was also down 17.4%.

Read our full analysis of Impinj’s results here and Monolithic Power Systems’s results here.

Inflation progressed towards the Fed’s 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride as the market switches between optimism and pessimism around rate cuts thanks to mixed inflation data, and while some of the analog semiconductors stocks have fared somewhat better, they have not been spared, with share prices down 4.6% on average over the last month. Microchip Technology is down 4% during the same time and is heading into earnings with an average analyst price target of $92.05 (compared to the current share price of $73.37).

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.