Microchip Technology sees strong growth with data centers and aerospace driving future gains

Microchip Technology reported strong revenue growth and margin recovery in the first quarter of FY2027, driven by accelerating data center demand and growth in aerospace and defense sectors. The company’s valuation is expected to improve significantly by FY2028, with price-to-earnings ratios dropping to 16x and share prices potentially rising to $91–$103. Key risks include the possibility of mistaking cyclical recovery for long-term structural growth and the impact of high debt levels on capital returns beyond dividends. Overall, Microchip is rated a Buy due to its combination of cyclical recovery and emerging structural growth opportunities.