Microchip Technology's Data Center Business Expected to Grow 65% This Year, Shares Jump Over 8% After Hours
Claire Weston
Microchip Technology expects its data center unit to grow roughly 65% to about $500 million in 2026 revenue. Shares jumped over 8% after hours — the market is pricing in not a broad recovery, but an acceleration in one specific lane.
Where does the 65% growth come from?
Microchip's dedicated Data Center Solutions Business Unit posted $302.7 million in 2025 calendar-year revenue. The company projects that to reach roughly $500 million in 2026 — about 65% growth.
The ramp is already visible: the March 2026 quarter saw 62.9% year-over-year growth in this unit. This means → the full-year 65% target is a continuation of existing momentum, not a stretch.
In plain terms = this unit builds chips specifically for data centers. It did $300 million last year and aims for $500 million this year — the increment is almost half the unit's current size.
How important is data center to the whole company?
The broader data center and computing end market — which also includes power management, catalog MCUs, analog, and security products beyond the dedicated unit — accounts for roughly 18% of total company revenue.
Microchip is also adding PCIe retimers — chips that extend high-speed signal reach inside servers — to its product lineup starting in the June quarter.
This signals a deliberate doubling-down: more capacity and a wider product line, both pointed at data centers.
What does the price increase mean?
Microchip announced selective price increases across a broad product portfolio, citing input-cost pressure from suppliers that is "broad-based and cannot be fully absorbed."
The company stressed that the increases will not affect guidance or results for the fiscal quarter ending June 30, 2026. This means → the price hikes have not taken effect yet; near-term margins are unchanged.
In plain terms = upstream costs rose, and Microchip is passing part of them to customers — but the timeline is the back half of the year. This quarter's numbers stand as guided.
How do the latest results and stock performance look?
Fiscal Q4 revenue rose 35% year-over-year to $1.31 billion, beating the Street's $1.26 billion estimate. June-quarter guidance calls for 11% year-over-year revenue growth and non-GAAP EPS of $0.67–$0.71, both above consensus.
Year to date, Microchip shares are up more than 40%, versus 11% for the S&P 500 — outperforming by nearly 30 percentage points.
This reflects a market re-rating: investors are not just trading one good quarter, but repricing Microchip's long-term position in the data center lane.
Content is for reference only, not financial advice.