Microchip Technology (MCHP) saw its shares plummet 5.36% in after-hours trading on Thursday, despite reporting better-than-expected results for the first quarter of fiscal year 2026. The sharp decline appears to be driven by concerns over the company's second-quarter guidance.

For Q1, Microchip Technology reported adjusted earnings per share of $0.27, surpassing the analyst estimate of $0.24. Revenue came in at $1.0755 billion, also beating the expected $1.055 billion. However, the company posted a net loss of $46.4 million, translating to an EPS of -$0.09 on a GAAP basis.

Looking ahead to Q2, Microchip Technology provided guidance that seems to have spooked investors. The company expects net sales between $1.110 billion and $1.150 billion, with adjusted EPS ranging from $0.34 to $0.37. While this outlook is generally in line with or slightly above analyst expectations of $0.31 EPS on $1.13 billion in revenue, it may suggest a slower growth trajectory than some investors had hoped for. Additionally, the company announced a quarterly cash dividend of 45.5 cents per share, which may not have been enough to offset concerns about future performance.