On Wednesday, shares of Microchip Technology Inc (NASDAQ:MCHP) declined 2.8% after J Capital Research released a cautious short‑seller report that questioned the semiconductor company's data‑center growth outlook despite recent enthusiasm around artificial‑intelligence applications. J Capital observed that Microchip’s Data Center and Compute revenue has fallen over the past four years, even as overall data‑center capital‑expenditure spending has risen, and noted that the data‑center segment accounts for only roughly 7% of the company's total revenue. The firm further pointed out that Microchip’s capital expenditures are running below depreciation rates, ranking lowest on a capex‑to‑depreciation basis among nine competitors, and argued there is no evidence the company is preparing for rapid scaling of its Data Center Solutions Business Unit. According to the report, Microchip generated $302.7 million in data‑center sales, a figure dwarfed by Marvell’s $4 billion in 2025 (88% growth) and Broadcom’s $20 billion (65% growth). While Microchip projects a 67% increase in its data‑center business for the current year, J Capital expressed doubt about the durability of such growth and highlighted that the company has lost customers over the past two years with no assurance of their return. Despite a 46% rise in Microchip’s share price since the start of the year, the short‑seller suggested the stock’s valuation appears elevated relative to its growth profile outside the data‑center segment. Company executives have described data‑centers as part of a "megatrend" and claim their products serve the "bleeding edge" of AI technology. The article was generated with AI assistance and reviewed by an editor.