Microchip Technology Surges 8.35% on Q3 Forecast Hike and Sector Rally

Summary
• Microchip Technology (MCHP) surges 8.35% intraday to $72.66, breaking above 52-week high of $77.20
• CEO Steve Sanghi signals $1.185B Q3 revenue, up from $1.109B-$1.149B guidance
• Semiconductor sector rallies on AI-driven memory demand, with ASML and TSMC up 14% YTD
Microchip Technology’s stock is surging on a bullish Q3 revenue forecast and broader semiconductor sector momentum. The chipmaker’s revised guidance, coupled with strong bookings and inventory correction progress, has ignited investor optimism. Meanwhile, the sector is riding a wave of AI-driven demand for memory chips, with peers like Micron and Samsung leading the charge.

Q3 Revenue Guidance Hike and Inventory Recovery Fuel MCHP Surge
Microchip Technology’s 8.35% intraday rally stems from its Q3 fiscal 2026 revenue guidance increase to $1.185 billion, well above its prior range of $1.109 billion to $1.149 billion. CEO Steve Sanghi highlighted robust December-quarter bookings, a stronger March-quarter backlog, and progress on inventory reduction, which will lower write-offs. The stock’s sharp move aligns with broader sector optimism as AI demand drives memory prices higher, with investors betting on sustained recovery in end markets.

Semiconductor Sector Rallies on AI-Driven Memory Demand
The semiconductor sector is surging on AI-driven demand for memory chips, with ASML, TSMC, and Micron leading the charge. Memory prices are expected to rise 40% through Q2 2026, driven by AI data center expansion. Microchip’s 8.35% gain mirrors the sector’s momentum, though it lags behind memory peers like Micron (+9% YTD) and Samsung (+15.9% YTD). The sector’s rally reflects confidence in AI infrastructure spending, with investors rotating into companies positioned to benefit from DRAM and HBM demand.

Options and ETF Plays for MCHP’s Bullish Momentum
• MCHP20260109C63: Call option with 131.26% IV, 8.04% leverage ratio, and 0.0223 gamma (high sensitivity to price moves)
• MCHP20260109C66: Call option with 100.02% IV, 11.81% leverage ratio, and 0.0339 gamma (strong theta decay of -0.3928)
• 200-day MA: $61.17 (below current price), RSI: 49.47 (neutral), MACD: 1.34 (bullish divergence)
• Bollinger Bands: Price at $72.66, above upper band of $68.76, signaling overbought conditions
• Short-term bullish setup: MCHP is testing its 52-week high of $77.20, with key support at $64.08 (200D MA) and resistance at $72.79 (intraday high). A break above $72.79 could target $77.20, while a pullback to $64.08 may trigger a rebound. The MCHP20260109C63 and MCHP20260109C66 options offer high leverage and liquidity, ideal for capitalizing on a continuation of the rally. For a 5% upside scenario (targeting $76.29), the MCHP20260109C63 would yield a 60.71% payoff, while the MCHP20260109C66 would deliver 214.88%. Aggressive bulls should consider MCHP20260109C66 into a breakout above $72.79.

Backtest Microchip Technology Stock Performance
The backtest of MCHP's performance following an 8% intraday increase from 2022 to the present reveals a significant underperformance. The strategy yielded a return of -23.25%, lagging the benchmark by 66.22%. With a maximum drawdown of 0.00% and a Sharpe ratio of -0.15, the strategy demonstrated a high risk and a substantial loss relative to the market.

MCHP’s Bull Run Gains Steam—Act on Key Levels
Microchip Technology’s 8.35% surge is a clear signal of its recovery and sector strength. With Q3 guidance raised and inventory correction underway, the stock is primed for further gains if it holds above $64.08 (200D MA). The semiconductor sector’s AI-driven momentum, led by memory peers like Micron and Samsung, adds tailwinds. Investors should monitor the $72.79 intraday high as a critical resistance level—break above it could trigger a run to $77.20. Meanwhile, the sector leader Intel (INTC) is up 0.41%, reinforcing the sector’s resilience. Act now: Buy MCHP20260109C66 for leveraged exposure if $72.79 breaks.