Microchip Technology (MCHP)

The sleeper story is capacity constraints emerging faster than expected - lead times doubling despite still shipping well below normalized demand suggests the inventory correction was more severe than anyone realized. The obvious headline is strong recovery metrics, but the real insight is they've created a supply-demand imbalance where even modest demand normalization is hitting capacity limits. The binding constraint is now substrate and packaging capacity, not end market demand. Steve's most revealing quote: 'This is just a warning shot to our customers to really bring their backlog healthy because lead times sure you get very short-term booking, you get very short-term visibility.' My view changes if they start missing delivery commitments or if the distribution sell-in/sell-out gap stops closing - that would signal they've hit a demand ceiling rather than a supply constraint.