Shares of Microchip Technology (MCHP) soared 13.53% in pre-market trading on Friday, following the company's release of better-than-expected fourth-quarter fiscal 2025 results and an optimistic outlook for the coming quarter. The semiconductor manufacturer's performance and guidance have sparked investor optimism about a potential recovery in the challenging chip market.

Microchip reported fourth-quarter revenue of $970.5 million, surpassing analysts' estimates of $962.8 million, despite a 26.8% year-over-year decline. The company's adjusted earnings per share of 11 cents met Wall Street expectations. More importantly, Microchip provided an upbeat forecast for the first quarter of fiscal 2026, projecting revenue between $1.02 billion and $1.07 billion, well above the consensus estimate of $987.62 million.

CEO Steve Sanghi's comments further fueled the stock's rally, as he stated that the March quarter likely marks "the bottom of this prolonged industry down cycle for Microchip." The company also reported that its bookings in April exceeded levels from any single month within the March quarter, indicating strengthening demand. These positive signals, combined with Microchip's focus on expanding its technology offerings in automotive and industrial applications, have bolstered investor confidence in the company's growth prospects amid a challenging semiconductor market. In response to the encouraging results and outlook, several analysts have raised their price targets for Microchip stock, contributing to the significant pre-market surge.