Home > Comparison > Technology > ADI vs MCHP
The strategic rivalry between Analog Devices, Inc. and Microchip Technology Incorporated defines the current trajectory of the semiconductor sector. Analog Devices operates as a capital-intensive innovator focused on high-performance analog and mixed-signal processing. Microchip Technology emphasizes embedded control solutions with broad microcontroller applications. This analysis will identify which operational model offers superior risk-adjusted returns for a diversified technology portfolio in 2026.
Table of contents
Companies Overview
Analog Devices and Microchip Technology each hold significant stakes in the semiconductor industry, shaping modern electronics.
Analog Devices, Inc.: Precision Signal Processing Leader
Analog Devices excels as a designer and manufacturer of integrated circuits that convert analog signals into digital data and vice versa. Its revenue mainly stems from high-performance amplifiers, power management ICs, and microelectromechanical systems serving automotive, industrial, and communications sectors. In 2026, the company emphasizes advanced signal processing and power efficiency to sustain its competitive edge globally.
Microchip Technology Incorporated: Embedded Control Innovator
Microchip Technology specializes in embedded control solutions, offering microcontrollers, microprocessors, and analog components for automotive and industrial applications. Its core revenue drivers include smart microcontrollers and development tools enabling tailored system design. The 2026 strategy focuses on secure, connected embedded systems and expanding its footprint in automotive and IoT markets.
Strategic Collision: Similarities & Divergences
Both companies operate in semiconductors but diverge in focus: Analog Devices prioritizes analog and mixed-signal precision, while Microchip leans into embedded microcontrollers and connectivity. They compete primarily in industrial and automotive markets, where performance and integration matter most. Analog Devices offers a high-margin, innovation-driven profile; Microchip presents a volume-based, broad-market approach—each appealing to different risk and growth appetites.
Income Statement Comparison
This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | Analog Devices, Inc. (ADI) | Microchip Technology Incorporated (MCHP) |
|---|---|---|
| Revenue | 11.0B | 4.40B |
| Cost of Revenue | 5.00B | 1.93B |
| Operating Expenses | 3.02B | 2.17B |
| Gross Profit | 6.02B | 2.47B |
| EBITDA | 5.03B | 1.04B |
| EBIT | 3.03B | 0.29B |
| Interest Expense | 0.32B | 0.25B |
| Net Income | 2.27B | -0.50M |
| EPS | 4.59 | -0.005 |
| Fiscal Year | 2025 | 2025 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals each company’s operational efficiency and profitability under current market conditions.
Analog Devices, Inc. Analysis
ADI shows a strong revenue growth from $7.3B in 2021 to $11B in 2025, with net income rising from $1.39B to $2.27B. Gross margins remain healthy above 54%, and net margins improve to 20.58%, reflecting superior cost control. The fiscal year 2025 highlights robust momentum with a 16.9% revenue increase and a 39% EPS jump.
Microchip Technology Incorporated Analysis
MCHP’s revenue declined from $5.4B in 2021 to $4.4B in 2025, while net income swung from $349M profit to a $2.7M net loss. Despite a stable gross margin near 56%, net margin turned negative at -0.01%, signaling deteriorating profitability. The 2025 fiscal year exhibits steep declines across revenue (-42%) and EBIT (-89%), indicating operational stress.
Margin Strength vs. Declining Scale
ADI clearly outperforms MCHP with sustained revenue growth, expanding net margins, and strong profitability. MCHP struggles with shrinking top-line and collapsing net income, despite maintaining gross margin levels. For investors, ADI’s resilient margin profile and growth trajectory offer a more compelling financial foundation than MCHP’s recent earnings weakness.
Financial Ratios Comparison
These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of the companies compared:
| Ratios | Analog Devices, Inc. (ADI) | Microchip Technology Incorporated (MCHP) |
|---|---|---|
| ROE | 6.7% | -0.007% |
| ROIC | 5.5% | -0.03% |
| P/E | 51.1 | -52,021 |
| P/B | 3.42 | 3.67 |
| Current Ratio | 2.19 | 2.59 |
| Quick Ratio | 1.68 | 1.47 |
| D/E (Debt-to-Equity) | 0.26 | 0.80 |
| Debt-to-Assets | 18.1% | 36.9% |
| Interest Coverage | 9.45 | 1.18 |
| Asset Turnover | 0.23 | 0.29 |
| Fixed Asset Turnover | 3.32 | 3.72 |
| Payout Ratio | 84.9% | -1951% |
| Dividend Yield | 1.66% | 3.75% |
| Fiscal Year | 2025 | 2025 |
Efficiency & Valuation Duel: The Vital Signs
Financial ratios act as a company’s DNA, exposing hidden risks and operational strengths that define its market position and investment appeal.
Analog Devices, Inc.
Analog Devices shows a solid net margin of 20.58%, signaling operational efficiency despite a modest ROE of 6.7%. Its P/E ratio at 51.05 suggests the stock is expensive, reflecting high growth expectations. Shareholders benefit from a 1.66% dividend yield, balancing returns with ongoing R&D investments at 16% of revenue.
Microchip Technology Incorporated
Microchip faces profitability challenges with negative net margin and ROE near zero, indicating operational struggles. The distorted P/E is misleading, but a favorable dividend yield of 3.75% offers income. Its reinvestment focuses heavily on R&D, consuming 22% of revenue, aiming to revive growth despite elevated debt levels and weaker coverage ratios.
Premium Valuation vs. Operational Strain
Analog Devices offers a better balance of operational efficiency and shareholder returns, albeit at a premium valuation. Microchip’s profile fits risk-tolerant investors seeking income and turnaround potential but carries higher financial risks. Choose based on tolerance for expense versus recovery uncertainty.
Which one offers the Superior Shareholder Reward?
I find Analog Devices (ADI) more attractive for shareholders than Microchip Technology (MCHP) in 2026. ADI pays a modest 1.7% dividend yield with a high payout ratio near 85%, well-covered by strong free cash flow (8.7B FCF implied). Its consistent dividend growth pairs with aggressive buybacks, enhancing total return. MCHP offers a higher 3.75% yield but struggles with negative net margins recently, signaling dividend risk despite a lower payout ratio and smaller buyback scale. ADI’s balanced distribution through dividends and buybacks, supported by robust margins and cash flow, signals a more sustainable and superior long-term reward for investors.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of Analog Devices, Inc. and Microchip Technology Incorporated, highlighting their financial strengths and vulnerabilities:
Analog Devices shows a balanced profile with moderate scores across DCF, ROE, ROA, and debt-to-equity, though its valuation metrics lag with a very unfavorable P/E score. Microchip relies heavily on its DCF strength but scores very low on profitability and leverage metrics, indicating a weaker operational base and higher financial risk.
Bankruptcy Risk: Solvency Showdown
Analog Devices exhibits a superior Altman Z-Score of 7.14 versus Microchip’s 4.05, both in the safe zone but signaling better long-term survival odds for Analog Devices:
Financial Health: Quality of Operations
Analog Devices scores a strong 7 on the Piotroski F-Score, reflecting robust internal financial health. Microchip’s 3 signals significant red flags in operational quality and financial stability:
How are the two companies positioned?
This section dissects the operational DNA of ADI and MCHP by comparing revenue distribution and internal dynamics. The goal is to confront their economic moats, revealing which model delivers the most resilient competitive advantage today.
Revenue Segmentation: The Strategic Mix
This visual comparison dissects how Analog Devices, Inc. and Microchip Technology Incorporated diversify their income streams and where their primary sector bets lie:
Analog Devices leans heavily on its Industrial segment, which anchors $4.3B of its $9.5B 2024 revenue, complemented by solid Automotive ($2.8B) and Consumer ($1.2B) streams. In contrast, Microchip Technology derives nearly all $7.5B from Semiconductor Products, with a minor licensing contribution at $103M. Analog Devices’ diversified mix reduces concentration risk and leverages industrial infrastructure dominance. Microchip’s reliance on one segment invites higher exposure to semiconductor cyclicality but benefits from focused capital allocation.
Strengths and Weaknesses Comparison
This table compares the strengths and weaknesses of Analog Devices, Inc. (ADI) and Microchip Technology Incorporated (MCHP):
ADI Strengths
- Diversified revenue across Automotive, Communications, Consumer, and Industrial sectors
- Strong net margin at 20.58%
- Favorable liquidity ratios with current ratio 2.19 and quick ratio 1.68
- Low leverage with debt-to-assets at 18.05% and interest coverage 9.54
- Robust fixed asset turnover at 3.32
- Geographic diversification across US, China, Europe, Japan, and Asia
MCHP Strengths
- High revenue from Semiconductor Products segment
- Favorable P/E ratio despite net losses
- Solid current ratio at 2.59 supports liquidity
- Favorable fixed asset turnover at 3.72
- Higher dividend yield at 3.75%
- Technology licensing adds revenue diversification
ADI Weaknesses
- Unfavorable return on equity at 6.7% below cost of capital
- P/E at 51.05 suggests overvaluation risk
- Unfavorable asset turnover at 0.23 indicating lower asset efficiency
- Slightly unfavorable price-to-book at 3.42
- Neutral ROIC versus WACC, limiting capital efficiency
MCHP Weaknesses
- Negative profitability metrics: net margin, ROE, and ROIC all below zero
- Interest coverage low at 1.15, raising debt service concerns
- Unfavorable asset turnover at 0.29
- Price-to-book at 3.67 is high relative to performance
- Higher leverage indicated by debt-to-assets at 36.85%
Overall, ADI shows stronger profitability and broader geographic and product diversification with healthier liquidity and leverage metrics. MCHP benefits from its semiconductor focus and dividend but faces profitability and debt coverage challenges. Both companies display asset turnover weaknesses that may impact capital efficiency.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat alone shields long-term profits from relentless competition and market shifts. Here’s how Analog Devices and Microchip Technology measure up:
Analog Devices, Inc. (ADI): Innovation-Driven Intangible Assets Moat
ADI’s moat stems from advanced analog and mixed-signal technology, reflected in strong margin stability and robust 20.6% net margin. Despite a slight value destruction (ROIC < WACC), its 64% ROIC growth signals deepening competitive strength in 2026.
Microchip Technology Incorporated (MCHP): Cost-Driven Scale Advantage Moat
MCHP relies on broad embedded controller offerings and manufacturing scale. Yet, its declining ROIC and negative net margin highlight intense margin pressure versus ADI’s innovation edge. Market contraction challenges its expansion prospects for 2026.
Innovation Edge vs. Scale Pressure: Who Holds the Deeper Moat?
ADI’s growing ROIC and stable margins grant it a wider, more durable moat than MCHP, whose shrinking profitability signals a fragile competitive position. ADI stands better equipped to protect market share amid intensifying semiconductor competition.
Which stock offers better returns?
The past year shows stark contrast in price performance and trading dynamics between Analog Devices, Inc. and Microchip Technology Incorporated, highlighting divergent investor sentiment and market momentum.
Trend Comparison
Analog Devices, Inc. posts a strong 58.66% price gain over 12 months, confirming a bullish trend with accelerating momentum and significant volatility marked by a 26.38 standard deviation.
Microchip Technology Incorporated declines 14.54% over the same period, reflecting a bearish trend despite acceleration; volatility is moderate with a 14.24 standard deviation.
Analog Devices clearly outperforms Microchip, delivering the highest market returns with sustained bullish momentum compared to Microchip’s persistent downtrend.
Target Prices
Analysts present a balanced target consensus for both Analog Devices, Inc. and Microchip Technology Incorporated.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| Analog Devices, Inc. | 270 | 375 | 316 |
| Microchip Technology Incorporated | 60 | 95 | 81 |
The target consensus for Analog Devices slightly exceeds its current price of $311, signaling modest upside potential. Microchip’s target consensus of $81 is notably above its current price near $76, indicating stronger expected appreciation.
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How do institutions grade them?
Analog Devices, Inc. Grades
Here are the latest grades from major financial institutions for Analog Devices, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Susquehanna | Maintain | Positive | 2026-01-22 |
| B of A Securities | Maintain | Buy | 2026-01-21 |
| Stifel | Maintain | Buy | 2026-01-16 |
| Oppenheimer | Maintain | Outperform | 2026-01-16 |
| Wells Fargo | Upgrade | Overweight | 2026-01-15 |
| Citigroup | Maintain | Buy | 2026-01-15 |
| Keybanc | Maintain | Overweight | 2026-01-13 |
| Truist Securities | Maintain | Hold | 2025-12-19 |
| UBS | Maintain | Buy | 2025-12-08 |
| Truist Securities | Maintain | Hold | 2025-11-26 |
Microchip Technology Incorporated Grades
Here are the latest grades from major financial institutions for Microchip Technology Incorporated:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | Maintain | Buy | 2026-01-26 |
| Susquehanna | Maintain | Positive | 2026-01-22 |
| B of A Securities | Maintain | Neutral | 2026-01-21 |
| Citigroup | Maintain | Buy | 2026-01-15 |
| Piper Sandler | Maintain | Overweight | 2026-01-15 |
| B. Riley Securities | Maintain | Buy | 2026-01-12 |
| Mizuho | Maintain | Outperform | 2026-01-09 |
| Wells Fargo | Maintain | Equal Weight | 2026-01-07 |
| JP Morgan | Maintain | Overweight | 2026-01-06 |
| Rosenblatt | Maintain | Buy | 2026-01-06 |
Which company has the best grades?
Analog Devices, Inc. generally receives stronger buy and overweight ratings compared to Microchip Technology’s more mixed neutral and equal weight grades. This suggests investors might view Analog Devices as having a more favorable near-term outlook.
Risks specific to each company
The following categories identify the critical pressure points and systemic threats facing both firms in the 2026 market environment:
1. Market & Competition
Analog Devices, Inc.
- Operates in high-end analog and mixed-signal ICs, facing intense innovation pressure and diverse industrial demand.
Microchip Technology Incorporated
- Focuses on embedded control solutions, but suffers from weak profitability and high competition in microcontrollers.
2. Capital Structure & Debt
Analog Devices, Inc.
- Low debt-to-equity (0.26) and strong interest coverage (9.54) suggest prudent leverage use and financial stability.
Microchip Technology Incorporated
- Higher leverage (debt-to-equity 0.8) and weak interest coverage (1.15) increase financial risk and vulnerability to rising rates.
3. Stock Volatility
Analog Devices, Inc.
- Beta near 1.03 indicates market-level volatility, consistent with tech sector norms.
Microchip Technology Incorporated
- Beta of 1.45 shows higher sensitivity to market swings, increasing risk for investors.
4. Regulatory & Legal
Analog Devices, Inc.
- Subject to global semiconductor regulations, but diversified product lines reduce single-point regulatory risk.
Microchip Technology Incorporated
- Faces similar regulatory landscape, but weaker financials could amplify impact of compliance costs or sanctions.
5. Supply Chain & Operations
Analog Devices, Inc.
- Benefits from integrated design and manufacturing, mitigating supply chain disruptions.
Microchip Technology Incorporated
- Relies more on subcontracting and outsourcing, exposing it to supply chain volatility and quality control risks.
6. ESG & Climate Transition
Analog Devices, Inc.
- Strong operational controls align with ESG trends; energy management products support climate transition.
Microchip Technology Incorporated
- ESG commitment less clear; operational and financial weakness may hinder effective climate adaptation.
7. Geopolitical Exposure
Analog Devices, Inc.
- Global footprint across Americas, Asia, and Europe diversifies geopolitical risk but exposes it to trade tensions.
Microchip Technology Incorporated
- Also global but with potentially higher risk due to financial fragility and concentrated product segments.
Which company shows a better risk-adjusted profile?
Analog Devices faces its greatest risk from stiff market competition demanding continual innovation. Microchip’s largest risk is its fragile financial health marked by negative profitability and high leverage. Overall, Analog Devices displays a stronger risk-adjusted profile, supported by robust balance sheet metrics and a safer Altman Z-score (7.14 vs. 4.05). This stability justifies my concern for Microchip, whose negative net margin and weak Piotroski score (3) reveal operational and financial stress amid market pressures.
Final Verdict: Which stock to choose?
Analog Devices, Inc. (ADI) stands out as a cash machine with robust revenue growth and a disciplined capital structure. Its key strength lies in operational efficiency and a solid current ratio, but investors should watch the stretched valuation multiples. ADI suits aggressive growth portfolios seeking sector leadership and innovation leverage.
Microchip Technology Incorporated (MCHP) benefits from a strategic moat rooted in niche market penetration and recurring revenue streams. It offers a more defensive profile compared to ADI’s growth tilt, though its profitability challenges and higher leverage raise caution. MCHP aligns better with GARP investors who tolerate near-term volatility for potential turnaround upside.
If you prioritize growth backed by operational excellence and a strong balance sheet, ADI is the compelling choice due to its robust income statement and improving profitability. However, if you seek value in a turnaround scenario with a focus on steady recurring revenue, MCHP offers better stability despite its current headwinds and elevated risk.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Analog Devices, Inc. and Microchip Technology Incorporated to enhance your investment decisions:
