In the fast-evolving semiconductor industry, Broadcom Inc. (AVGO) and Microchip Technology Incorporated (MCHP) stand out as key players with overlapping market footprints. Both companies innovate across critical technology segments, from embedded controllers to infrastructure solutions, driving global digital transformation. This article will dissect their strategies and financial strengths to help you decide which stock might be the more compelling addition to your investment portfolio.
Table of contents
Companies Overview
I will begin the comparison between Broadcom Inc. and Microchip Technology Incorporated by providing an overview of these two companies and their main differences.
Broadcom Inc. Overview
Broadcom Inc. is a global technology company specializing in semiconductor and infrastructure software solutions. Headquartered in Palo Alto, California, it employs 37,000 people and operates through four main segments: Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial & Other. Broadcom’s diverse product portfolio serves markets including data centers, telecommunications, smartphones, and industrial automation.
Microchip Technology Incorporated Overview
Microchip Technology Incorporated develops and manufactures embedded control solutions, including microcontrollers and analog products. Based in Chandler, Arizona, it employs 22,300 staff and offers products for automotive, industrial, computing, and communications sectors. The company also provides development tools, memory solutions, and manufacturing services, focusing on smart, connected, and secure embedded technologies.
Key similarities and differences
Both companies operate in the semiconductor industry, supplying critical components for a variety of technology applications. Broadcom has a broader product range including infrastructure software and complex subsystems, while Microchip focuses primarily on embedded control solutions and microcontrollers. Broadcom’s scale is considerably larger with a market cap of approximately 1.6T USD compared to Microchip’s 40B USD, reflecting differences in market reach and business scope.
Income Statement Comparison
Below is a comparison of key income statement metrics for Broadcom Inc. and Microchip Technology Incorporated for their most recent fiscal years.
| Metric | Broadcom Inc. (AVGO) | Microchip Technology Inc. (MCHP) |
|---|---|---|
| Market Cap | 1.6T | 40.2B |
| Revenue | 63.9B | 4.4B |
| EBITDA | 34.7B | 1.0B |
| EBIT | 25.9B | 0.3B |
| Net Income | 23.1B | -0.5M |
| EPS | 4.91 | -0.005 |
| Fiscal Year | 2025 | 2025 |
Income Statement Interpretations
Broadcom Inc.
Broadcom Inc. demonstrated robust revenue growth from $27.45B in 2021 to $63.89B in 2025, with net income surging from $6.44B to $23.13B. Margins considerably improved, with a gross margin at 67.77% and net margin at 36.2% in 2025. The latest year saw strong growth acceleration, notably an 87% rise in EBIT and nearly 288% EPS growth, indicating improving profitability and operational efficiency.
Microchip Technology Incorporated
Microchip Technology’s revenue declined from $5.44B in 2021 to $4.40B in 2025, while net income dropped from $349M to a loss of $2.7M. Gross margin remained favorable at 56.07%, but EBIT margin stayed low at 6.6%, and net margin turned negative. The latest year reflected a sharp downturn with a 42% revenue decrease and EBIT plunging 89%, signaling weakening fundamentals and profitability challenges.
Which one has the stronger fundamentals?
Broadcom displays significantly stronger fundamentals, characterized by consistent revenue and net income growth, expanding margins, and favorable profitability metrics. Conversely, Microchip shows declining sales, negative net income, and deteriorating margins, resulting in an unfavorable income statement outlook. Broadcom’s robust financial performance contrasts with Microchip’s ongoing operational and profitability struggles.
Financial Ratios Comparison
The table below summarizes the most recent key financial ratios for Broadcom Inc. (AVGO) and Microchip Technology Incorporated (MCHP) based on their fiscal year 2025 data to facilitate a clear comparison.
| Ratios | Broadcom Inc. (AVGO) | Microchip Technology Incorporated (MCHP) |
|---|---|---|
| ROE | 28.4% | -0.007% |
| ROIC | 16.4% | -0.027% |
| P/E | 73.9 | -52,021 |
| P/B | 21.0 | 3.67 |
| Current Ratio | 1.71 | 2.59 |
| Quick Ratio | 1.58 | 1.47 |
| D/E (Debt-to-Equity) | 0.80 | 0.80 |
| Debt-to-Assets | 38.1% | 36.9% |
| Interest Coverage | 7.94 | 1.18 |
| Asset Turnover | 0.37 | 0.29 |
| Fixed Asset Turnover | 25.3 | 3.72 |
| Payout Ratio | 48.2% | -1951.4% |
| Dividend Yield | 0.65% | 3.75% |
Interpretation of the Ratios
Broadcom Inc.
Broadcom shows strong profitability with a 36.2% net margin and a robust 28.45% return on equity, indicating efficient use of capital. Concerns include a high PE ratio of 73.87 and a price-to-book of 21.01, both unfavorable. The company pays dividends, but with a low 0.65% yield and moderate payout, suggesting cautious distribution aligned with free cash flow.
Microchip Technology Incorporated
Microchip’s financial ratios reveal weaknesses, including negative net margin and return on equity, signaling profitability challenges. However, liquidity ratios are favorable, with a current ratio of 2.59. It offers a relatively high dividend yield of 3.75%, supported by a low PE ratio, but interest coverage is low, posing potential risk to debt servicing.
Which one has the best ratios?
Broadcom’s ratios are generally more favorable, particularly in profitability and capital efficiency, despite some valuation concerns. Microchip struggles with profitability and interest coverage but maintains stronger liquidity and dividend yield. Overall, Broadcom presents a slightly favorable ratio profile compared to Microchip’s slightly unfavorable evaluation.
Strategic Positioning
This section compares the strategic positioning of Broadcom Inc. and Microchip Technology Incorporated, including market position, key segments, and exposure to disruption:
Broadcom Inc.
- Leading semiconductor firm with NASDAQ listing, facing moderate competitive pressure.
- Diversified segments: Infrastructure Software and Semiconductor Solutions drive revenues.
- Exposure through complex semiconductor and infrastructure software products, including firmware and hardware.
Microchip Technology Incorporated
- Smaller semiconductor company listed on NASDAQ with higher beta and competitive pressures.
- Focused on semiconductor products and technology licensing, specializing in embedded control solutions.
- Exposure primarily via embedded microcontrollers, analog, and mixed-signal products with licensing activities.
Broadcom Inc. vs Microchip Technology Incorporated Positioning
Broadcom presents a diversified business model covering multiple semiconductor and software segments, offering broad market exposure. Microchip concentrates on embedded control semiconductors and licensing, which narrows its focus but targets specialized applications. Each approach entails distinct operational scopes and risk profiles.
Which has the best competitive advantage?
Broadcom demonstrates a very favorable moat with growing ROIC exceeding WACC, indicating durable competitive advantage and increasing profitability. Microchip shows a very unfavorable moat with declining ROIC below WACC, reflecting value destruction and weakening profitability.
Stock Comparison
The stock price movements of Broadcom Inc. and Microchip Technology Incorporated over the past year reveal contrasting trading dynamics, with Broadcom showing strong growth albeit recent weakness, while Microchip exhibits a general decline offset by recent gains.
Trend Analysis
Broadcom Inc. (AVGO) experienced a bullish trend over the past 12 months, with a 162.18% price increase and a decelerating upward momentum. The stock ranged between $120.47 and $402.96, showing high volatility with a 78.56 standard deviation.
Microchip Technology Incorporated (MCHP) showed a bearish trend over the same period, declining by 9.85% despite accelerating downward momentum. The stock traded between $36.22 and $98.23, with lower volatility at a 14.38 standard deviation.
Comparing both, Broadcom delivered the highest market performance over the past year, outperforming Microchip significantly in price appreciation despite recent short-term weakness.
Target Prices
The consensus target prices from recognized analysts indicate promising upside potential for both Broadcom Inc. and Microchip Technology Incorporated.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Broadcom Inc. | 510 | 370 | 454.8 |
| Microchip Technology Incorporated | 85 | 60 | 76.5 |
Analysts expect Broadcom’s stock to rise significantly from its current price of 339.89 USD, with a consensus target near 455 USD. Microchip’s consensus target of 76.5 USD slightly exceeds its current trading price of 74.68 USD, suggesting moderate growth potential.
Analyst Opinions Comparison
This section compares analysts’ ratings and financial scores for Broadcom Inc. (AVGO) and Microchip Technology Incorporated (MCHP):
Rating Comparison
AVGO Rating
- Rating: B, assessed as Very Favorable overall rating status.
- Discounted Cash Flow Score: 3, indicating moderate valuation based on cash flow.
- ROE Score: 5, very favorable efficiency in generating profit from equity.
- ROA Score: 5, very favorable asset utilization to generate earnings.
- Debt To Equity Score: 1, very unfavorable, indicating higher financial risk.
- Overall Score: 3, moderate overall financial standing.
MCHP Rating
- Rating: C-, with a status marked as Very Favorable despite the lower letter grade.
- Discounted Cash Flow Score: 3, also moderate assessment of valuation from cash flow perspective.
- ROE Score: 1, very unfavorable, indicating low efficiency in generating profit from equity.
- ROA Score: 1, very unfavorable, showing poor asset utilization for earnings generation.
- Debt To Equity Score: 1, very unfavorable, also indicating higher financial risk.
- Overall Score: 1, very unfavorable overall financial standing.
Which one is the best rated?
Broadcom Inc. (AVGO) has a better overall rating (B vs. C-) and superior financial scores in ROE and ROA, indicating stronger profitability and asset use. However, both have equally unfavorable debt-to-equity scores, and AVGO holds a moderate overall score compared to MCHP’s very unfavorable rating.
Scores Comparison
Here is a comparison of the Altman Z-Score and Piotroski Score for Broadcom Inc. and Microchip Technology Incorporated:
AVGO Scores
- Altman Z-Score: 12.13, indicating a strong safe zone status.
- Piotroski Score: 8, classified as very strong financial health.
MCHP Scores
- Altman Z-Score: 4.00, indicating a safe zone status but significantly lower.
- Piotroski Score: 3, classified as very weak financial health.
Which company has the best scores?
Broadcom Inc. shows superior financial stability with a much higher Altman Z-Score and a very strong Piotroski Score. Microchip Technology has a safe Altman score but a weak Piotroski score, indicating weaker financial strength comparatively.
Grades Comparison
Here is a detailed comparison of the latest grades from reputable grading companies for Broadcom Inc. and Microchip Technology Incorporated:
Broadcom Inc. Grades
The following table summarizes recent analyst grades for Broadcom Inc. from established financial firms.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Mizuho | Maintain | Outperform | 2026-01-09 |
| Truist Securities | Maintain | Buy | 2025-12-19 |
| UBS | Maintain | Buy | 2025-12-15 |
| Benchmark | Maintain | Buy | 2025-12-12 |
| Rosenblatt | Maintain | Buy | 2025-12-12 |
| Piper Sandler | Maintain | Overweight | 2025-12-12 |
| TD Cowen | Maintain | Buy | 2025-12-12 |
| B of A Securities | Maintain | Buy | 2025-12-12 |
| JP Morgan | Maintain | Overweight | 2025-12-12 |
| Mizuho | Maintain | Outperform | 2025-12-12 |
Broadcom’s grades consistently indicate strong buy-side sentiment, with multiple firms maintaining Buy, Outperform, or Overweight ratings.
Microchip Technology Incorporated Grades
Below is a summary of recent analyst grades for Microchip Technology Incorporated from recognized financial institutions.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| 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 |
| Morgan Stanley | Maintain | Equal Weight | 2026-01-06 |
| Needham | Maintain | Buy | 2026-01-06 |
| Rosenblatt | Maintain | Buy | 2026-01-06 |
| Stifel | Maintain | Buy | 2026-01-06 |
| Cantor Fitzgerald | Upgrade | Overweight | 2025-12-16 |
| B of A Securities | Maintain | Neutral | 2025-12-05 |
Microchip’s grades show a mix of Buy and Overweight ratings with some Equal Weight and Neutral positions, reflecting a moderately positive but more varied consensus.
Which company has the best grades?
Broadcom Inc. generally receives stronger and more consistent buy-oriented grades than Microchip Technology, suggesting a higher level of analyst confidence. This may impact investors by indicating potentially stronger market sentiment and perceived growth prospects for Broadcom relative to Microchip.
Strengths and Weaknesses
Below is a comparison of key strengths and weaknesses of Broadcom Inc. (AVGO) and Microchip Technology Incorporated (MCHP) based on their recent financial and operational data.
| Criterion | Broadcom Inc. (AVGO) | Microchip Technology (MCHP) |
|---|---|---|
| Diversification | Strong revenue mix with $36.9B in Semiconductor Solutions and $27.0B in Infrastructure Software (2025) | Primarily semiconductor products with $4.27B and limited technology licensing revenue ($131M) (2025) |
| Profitability | High profitability: 36.2% net margin, 28.45% ROE, 16.36% ROIC (2025) | Negative net margin (-0.01%) and ROE, and slightly negative ROIC indicating losses (2025) |
| Innovation | Demonstrates growing ROIC (+34.4%) suggesting effective innovation and competitive advantage | Declining ROIC (-100.4%) indicating challenges in sustaining innovation and profitability |
| Global presence | Large scale with durable moat and strong global reach in software and semiconductor markets | Smaller scale with weakening competitive position, less global influence |
| Market Share | Very favorable economic moat with ROIC > WACC by 7.08%, showing value creation | Very unfavorable moat with ROIC below WACC by -9.64%, reflecting value destruction |
Broadcom stands out with strong diversification, high profitability, and a durable competitive moat, making it a more stable and attractive investment. Microchip struggles with profitability and value creation, signaling higher risk for investors.
Risk Analysis
Below is a comparative table of key risks for Broadcom Inc. (AVGO) and Microchip Technology Incorporated (MCHP) based on the latest available data for 2025:
| Metric | Broadcom Inc. (AVGO) | Microchip Technology (MCHP) |
|---|---|---|
| Market Risk | Beta 1.22, moderate volatility, tech sector sensitivity | Beta 1.45, higher volatility, semiconductor cyclical risk |
| Debt level | Debt/Equity 0.8, neutral leverage, interest coverage strong (8.08) | Debt/Equity 0.8, neutral leverage, weak interest coverage (1.15) |
| Regulatory Risk | Moderate, global tech regulations | Moderate, global tech and export controls |
| Operational Risk | Diversified product portfolio, stable operations | Product concentration, operational challenges reflected in negative margins |
| Environmental Risk | Moderate, exposure to energy and manufacturing sectors | Moderate, manufacturing footprint with environmental compliance needs |
| Geopolitical Risk | Exposure to global supply chain disruptions | Similar exposure, potentially higher due to smaller scale |
In synthesis, Broadcom exhibits a moderate market risk with stable operational and financial health, supported by strong profitability and robust interest coverage. Microchip shows higher market risk and operational vulnerabilities, evidenced by negative profitability and weak interest coverage, increasing default risk despite a safe Altman Z-Score. Debt levels are comparable but Microchip’s weaker interest coverage signals caution. Geopolitical and regulatory risks remain relevant for both, given their global semiconductor exposure.
Which Stock to Choose?
Broadcom Inc. (AVGO) has shown strong income growth with a 23.87% revenue increase in 2025 and favorable profitability metrics, including a 36.2% net margin. Its financial ratios are mostly favorable, reflecting solid returns on equity (28.45%) and invested capital (16.36%), alongside a manageable debt level and a very favorable overall rating.
Microchip Technology Incorporated (MCHP) experienced a significant revenue decline of 42.35% in 2025, with an unfavorable net margin of -0.01%. Its financial ratios indicate challenges, including negative returns on equity and invested capital, higher leverage, and a mixed rating profile with some favorable liquidity ratios but an overall slightly unfavorable evaluation.
For investors, AVGO’s very favorable rating and robust income statement suggest it might appeal to those seeking quality and growth, while MCHP’s financial difficulties and declining profitability could suggest a higher risk profile, potentially more suitable for risk-tolerant investors who might seek turnaround opportunities or value plays.
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 Broadcom Inc. and Microchip Technology Incorporated to enhance your investment decisions:
