Vishay vs. Microchip: Which Semiconductor Stock Is the Better Buy?

However, differences in their profitability, growth outlook and valuation make one stock stand out as the stronger investment opportunity today. Let’s delve deeper.

Vishay: Growth Momentum Is Improving

The company's multi-year Vishay 3.0 transformation is now translating into stronger operating performance. The strategy focuses on expanding manufacturing capacity, broadening the product portfolio, improving customer engagement and increasing technical support, enabling Vishay to capture more business across growing markets.

The benefits became visible in the first quarter of 2026. Revenues increased 17.3% year over year to $839.2 million, exceeding management's guidance. Growth was broad-based across every end market, every sales channel and all three major geographic regions. Volume increased 5.8%, supported by stronger customer demand, inventory replenishment and continued market-share gains.

AI-related demand remains one of the strongest growth engines. VSH continues receiving orders for high-voltage MOSFETs, polymer capacitors, current-sense resistors and magnetics used in AI servers, networking equipment and power management systems. Management expects AI-related revenues in 2026 to be well above last year's level, helped by expanding customer relationships and additional design wins.

Vishay also reported a healthy book-to-bill ratio of 1.34, including 1.47 for semiconductors, while the backlog expanded 21% to $1.6 billion, representing 5.7 months of sales visibility. These numbers indicate that demand continues to outpace shipments, providing a favorable setup for future revenue growth. The Zacks Consensus Estimate for Vishay’s 2026 and 2027 revenues indicates year-over-year growth of 16.7% and 10.4%, respectively.

Vishay Revenue Estimates

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However, Vishay still faces challenges. It continues to face higher metals and materials costs, which management cited as a headwind that must be offset by volume and manufacturing efficiencies. Average selling prices, including tariff adders, declined 1.1% versus the prior quarter, showing limited pricing tailwind in the early stages of the upcycle. Inventory write-offs for obsolescence were $11.1 million in the first quarter, and inventories rose to $791 million as raw materials and work in process increased with higher metal prices and buffer stock builds. If costs stay elevated while pricing remains competitive, margin expansion can lag revenue growth.

Microchip: Stronger Fundamentals Support Long-Term Growth

Microchip has entered a stronger recovery phase. The company’s fourth-quarter fiscal 2026 revenues increased 35.1% year over year to $1.31 billion, beating expectations. Non-GAAP gross margin reached 61.6% from 52% in the year-ago quarter, while non-GAAP earnings jumped more than fivefold to 57 cents per share. Management is expecting another quarter of double-digit sequential revenue growth in the first quarter of fiscal 2027.

Microchip is also benefiting from growing AI and data center demand. Its expanding portfolio of PCIe Gen 6 switches, retimers, storage controllers and memory controllers is generating new design wins that should support future growth.

Microchip continues to lean on long-cycle aerospace and defense programs and a broad FPGA roadmap. During the last earnings call, management highlighted that the strongest sales performance in the fourth quarter was aerospace and defense, while FPGA products were the strongest business unit performer.

Microchip’s radiation-tolerant FPGA solutions are positioned for power-sensitive platforms, and the company has also introduced cost-optimized FPGA offerings aimed at lowering system cost without sacrificing security. The PolarFire 2 device is expected to launch later in 2026, with initial sample runs already allocated and demand extending beyond aerospace and defense. Security controllers and post-quantum-ready capabilities further support adoption in regulated and high-reliability applications.

Microchip’s strong financial performance is likely to continue as depicted for the Zacks Consensus Estimate for its fiscal 2027 and 2028 revenues. The consensus mark for the company’s fiscal 2027 and 2028 revenues indicates a year-over-year rise of 32.3% and 18.2%, respectively. The expected top-line growth rates are significantly higher than Vishay’s.

Microchip Revenue Estimates

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VSH vs. MCHP: Earnings Estimate Revision Trend

Both companies are benefiting from an improving demand scenario across the industrial, automotive and embedded electronics markets, but analysts appear more optimistic about Microchip's earnings outlook.

Over the past 60 days, analysts have raised the Zacks Consensus Estimate for Microchip's fiscal 2027 and 2028 earnings by 1.62% and 1.78%, respectively. These meaningful upward revisions reflect growing confidence that MCHP’s growing AI opportunities will continue to support earnings growth.

Microchip Earnings Estimates Revision

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On the contrary, estimates for Vishay’s 2026 and 2027 earnings have remained unchanged over the past 60 days. Estimate revision trends for both companies suggest that analysts currently see stronger earnings momentum at Microchip.

Vishay Earnings Estimates Revision

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Valuation: Microchip Has the Edge Over Vishay

Vishay has been the stronger stock performer this year, with shares soaring 175.3% year to date compared with Microchip's 33.2% gain. However, that rally has pushed VSH's valuation higher.

Vishay currently trades at a forward P/E of 33.5X, while Microchip trades at a more attractive 25X. Given Microchip's healthier earnings momentum and growing AI opportunities, its lower valuation makes it the more appealing choice.

Conclusion: MCHP Seems a Better Bet

Both companies are well-positioned to benefit from the semiconductor industry's recovery, but Microchip offers the stronger overall investment case. Vishay's turnaround is encouraging, but higher metal and materials costs along with limited pricing tailwinds could limit profitability gains.

Microchip combines stronger earnings momentum, higher margins, expanding AI exposure and a cheaper valuation. These advantages make Microchip the better semiconductor stock to buy right now.

Microchip currently carries a Zacks Rank #2 (Buy), making it a better investment bet than Vishay, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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