Microchip Technology (MCHP) short-term visibility looks to be "improving" but there is risk to its long-term cyclical guidance, mainly due to global instability becoming a "new normal," Morgan Stanley said in a Tuesday note.

The company raised its fiscal Q3 outlook, citing a "broad-based recovery" throughout most of its end markets, and a 9-point execution strategy, including a "substantial" inventory reduction, the note said.

As Microchip continues to sail away from its "trough" 2025 March quarter, "we become incrementally more confident in the company's snapback potential," but uncertainty still looms, according to the note.

Morgan Stanley raised Microchip Technology's price target to $69 from $68 and maintained an equalweight rating on the stock.

Shares of the company were up 4.4% in recent Tuesday premarket activity.