Analog Devices told investors on Wednesday that the analog chip market it has spent a decade describing as a 5-7% grower should now compound at double digits for several years. The reasoning is arithmetic, not enthusiasm: roughly 100 gigawatts of new data-center capacity between 2026 and 2031, with each gigawatt consuming $1bn to $1.5bn of the power-management, signal-conditioning and data-conversion parts the company sells. ADI supplies the analog layer around digital compute — the chips that turn physical current, voltage and radio signals into numbers — for factory automation, test equipment, cars and telecom networks.

The quarter underneath that forecast was the best in company history. Revenue reached $4.02bn, up 39.6% year on year, beating consensus and lifting October-quarter guidance to $4.2-4.4bn against $3.55 of expected earnings per share. GAAP gross margin was 67.3%, against 62.1% a year earlier. Industrial, at 49% of revenue, grew 53%. Communications grew 84%, four-fifths of it data center. The shares closed down slightly on the day and sit 16% below their 22 June high.

Three chipmakers, one peak date

That date matters, because NXP Semiconductors and Microchip Technology peaked in the same session. NXP, the Eindhoven-based supplier of automotive microcontrollers, radar and secure connectivity chips, has fallen 30.1% from its 22 June close; Microchip, the Arizona broad-line vendor of 8-, 16- and 32-bit microcontrollers alongside analog and timing parts, is down 25.0%. Both crossed from an uptrend into a downtrend in mid-August, their 50-day averages slipping under their 200-day.

Nothing in either company's results supports the move. NXP grew revenue 19.5% to $3.496bn in the June quarter, its fourth consecutive quarter of acceleration, with gross margin at 57.3% and operating income up 55.9%. On the 28 July call management said book-to-bill is above 1.0 and rising, backlog visibility now runs 18 months, and customer escalations doubled. Crucially, it attributed the growth to content per vehicle rather than restocking: Western tier-one inventories show no replenishment and ordering remains hand-to-mouth. NXP guided September revenue to $3.75bn. The stock fell 7.7% anyway.

Microchip's print was the sharpest reversal of the bear case. June-quarter revenue rose 38% to $1.485bn. Gross margin has now expanded for five straight quarters, from 51.6% to 63.2%, and the under-utilization charges from idled fabs are shrinking — about $30.5m guided for September, down from $38.5m. Distributor inventory is down to 25 days, the low end of its historical range; bookings were the strongest in four years. September revenue was guided to $1.59-1.62bn against roughly $1.55bn expected. Its competitive edge in this cycle is counterintuitive: some $450m of idle equipment and slack internal fabs at a moment when AI has crowded out external foundry, packaging and test capacity industry-wide.

What actually moved the prices

Strip each stock's two worst sessions from the last 90 days and the picture separates. Microchip's 18.0% decline becomes a 1.4% gain; ADI's 6.2% decline becomes a 10.8% gain. Both hinge on 23 and 26 June — days when the whole semiconductor complex unwound, with the VanEck semiconductor ETF down 6.5% and Micron down 11.4%. July was then the worst month for chip stocks in more than a decade, erasing over $1trn. The August leg was a discount-rate event: the 30-year Treasury yield touched 5.33% on 18 August as the Philadelphia Semiconductor index dropped 5.4%.

NXP is the exception. Its 27.1% 90-day fall only improves to 14.5% without its two worst days — a genuine, sustained drift. The company-specific news does not explain it: the succession to Rafael Sotomayor completed in October 2025, and the reported approach to Ambarella, the edge-AI vision chip maker valued near $3.3bn, is an outbound purchase.

Where the price leaves room

Against mid-May, all three multiples have compressed: NXP from about 19.5x forward earnings to 15.0x, Microchip from 28.8x to 24.1x, ADI from 33.4x to 30.1x. NXP trades below its 19.2x trailing multiple because estimates are rising — consensus has FY2026 earnings up 28% — and carries a 5.2% free-cash-flow yield. Microchip's 106.8x trailing multiple prices trough profits and says nothing; 24.1x forward sits on earnings consensus expects to double. ADI is the one where the fall looks like a re-rating of a rich stock rather than a mispricing: 30.1x forward and 18.7x forward gross profit, after gaining 62% over twelve months. NXP, over the same twelve months, is flat.