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GlobalFoundries Inc (GFS)
NASDAQ:GFS
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GlobalFoundries Inc
(NASDAQ:GFS)
Rating:60Neutral
Price Target:
$39.00
▲(3.37%Upside)
Positive Factors
Customer Engagement
Robust design-win momentum with deep customer engagement, with 90% of recent design wins achieved on a sole-source basis, indicating deep customer engagement and confidence in its specialized capabilities.
Government Support
Investments under the CHIPS Act in the U.S. are driving expansions at GFS’s New York facility, including advanced packaging and photonics capabilities, supported by approximately USD1.5 billion in federal funding.
Technological Innovation
GFS emphasizes differentiated semiconductor technologies such as 22FDX® and silicon photonics, positioning itself in high-growth sectors including automotive, IoT, and data centers.
Negative Factors
Competitive Pressures
The average selling price of wafers is declining, which indicates increased competitive pressures.
Macroeconomic Challenges
Macroeconomic headwinds in the second half are expected, especially affecting consumer-related mobile and IoT segments.
Market Demand
Oversupply due to further deepening of weakened demand for consumer electronics, as GFS has a 41% revenue exposure to smart mobile devices.
GlobalFoundries Inc (GFS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$20.86B
Dividend YieldN/A
Average Volume (3M)1.47M
Price to Earnings (P/E)28.2
Beta (1Y)1.83
Revenue Growth-4.42%
EPS Growth-120.96%
CountryUS
Employees13,000
SectorTechnology
Sector Strength83
IndustrySemiconductors
Share Statistics
EPS (TTM)0.34
Shares Outstanding552,912,840
10 Day Avg. Volume1,292,279
30 Day Avg. Volume1,469,919
Financial Highlights & Ratios
PEG Ratio0.56
Price to Book (P/B)1.87
Price to Sales (P/S)0.00
P/FCF Ratio17.49
Enterprise Value/Market Cap0.97
Enterprise Value/Revenue0.74
Enterprise Value/Gross Profit12.26
Enterprise Value/Ebitda2.34
Forecast
1Y Price Target
$41.15Price Target Upside9.06% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
GlobalFoundries Inc Business Overview & Revenue Model
Company DescriptionGLOBALFOUNDRIES Inc. operates as a semiconductor foundry worldwide. It manufactures integrated circuits, which enable various electronic devices that are pervasive. The company manufactures a range of semiconductor devices, including microprocessors, mobile application processors, baseband processors, network processors, radio frequency modems, microcontrollers, power management units, and microelectromechanical systems, as well as offers mainstream wafer fabrication services and technologies. The company was founded in 2009 and is based in Malta, New York.
How the Company Makes MoneyGlobalFoundries Inc primarily makes money by manufacturing semiconductors for a diverse client base. The company operates on a 'fabless' model, where it does not produce its own branded semiconductor products but instead manufactures chips for other companies. Revenue is generated through multi-year contracts with these clients, who rely on GlobalFoundries' expertise in producing high-quality, customized semiconductor solutions. The company benefits from strategic partnerships with major technology firms, which provide a steady stream of orders and revenue. Additionally, GlobalFoundries invests in research and development to maintain its competitive edge and expand its portfolio of technology offerings, further contributing to its earnings.
GlobalFoundries Inc Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q1-2025)
| % Change Since: 5.16%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
While the company demonstrated strong performance in automotive and data center segments and maintained solid free cash flow generation, challenges such as geopolitical tensions, tariff impacts, and declines in smart mobile device revenues present significant concerns. The overall sentiment is mixed with balanced highlights and lowlights.Q1-2025 Updates
Positive Updates
Strong Revenue Growth in Key Segments
Automotive, CID, and IoT end markets grew on a year-over-year basis. Automotive revenue increased by 16% YoY, and Communications Infrastructure and Data Center (CID) revenue increased by 45% YoY.
Significant Free Cash Flow Generation
GlobalFoundries delivered $165 million of non-IFRS adjusted free cash flow, representing a free cash margin of approximately 10%.
Strategic Investments in Global Footprint
Over $7 billion has been deployed into U.S., Germany, and Singapore facilities since 2021, enhancing manufacturing scale and technology diversity.
Strong Balance Sheet and Liquidity
GlobalFoundries reported $4.7 billion of liquidity, with strong cash flow fundamentals and declining leverage.
Sole-Source Design Wins
Nearly 90% of design wins over the last four quarters have been sole-sourced, indicating strong customer reliance on GlobalFoundries.
Negative Updates
Impact of Geopolitical Tensions
Ongoing trade and tariff disputes are expected to impact global supply chain and end market demand dynamics into the second half of 2025.
Decline in Smart Mobile Devices Revenue
Smart mobile devices revenue declined approximately 21% sequentially and approximately 14% from the prior year period.
Reduced Underutilization Payments
The reduction in underutilization payments from customers led to a decline in average selling price per wafer.
Tariff-Related Cost Increases
Certain costs across the semiconductor supply chain are likely to rise due to tariff-related activities, potentially impacting margins.
Company Guidance
In the GlobalFoundries first quarter 2025 earnings call, the company provided optimistic guidance across several key metrics. The revenue for the quarter was reported at $1.585 billion, reflecting a 2% increase year-over-year, despite a 13% sequential decrease. The company achieved a gross margin of 23.9% and an operating margin of 13.4%, both at the high end of their guidance range. Notably, GlobalFoundries reported a $165 million non-IFRS adjusted free cash flow, representing a free cash flow margin of approximately 10%. For the second quarter of 2025, the company anticipates revenue to rise to $1.675 billion, with a gross margin of 25% and an operating margin of 14%. The company remains focused on maintaining strong free cash flow generation, aiming to surpass $1 billion for the year. Additionally, they highlighted a solid design win momentum, particularly in automotive and communications infrastructure, and are well-positioned to grow their serviceable addressable market by approximately 10% per annum through the end of the decade.GlobalFoundries Inc Financial Statement Overview
Summary
GlobalFoundries faces profitability and growth challenges, as reflected in the income statement. However, the company maintains a strong balance sheet and demonstrates excellent cash flow management, mitigating some risks. Continued focus on improving profitability and revenue growth will be essential for future stability and success.Income Statement
The income statement reflects a challenging period for GlobalFoundries. Gross profit margin has declined from 28.4% in 2023 to 24.4% in 2024, and the net profit margin has turned negative, moving from 13.8% in 2023 to -3.9% in 2024. Revenue growth has also been negative, declining by 8.7% from 2023 to 2024. Additionally, EBIT and EBITDA margins both deteriorated, with EBIT margin dropping from 15.3% to -3.2%, and EBITDA margin from 35.6% to 34.0% in 2024. The declining profitability and negative growth rates point to operational challenges.42
Neutral
Balance Sheet
The balance sheet shows a stable financial position with a debt-to-equity ratio of 0.21 in 2024, indicating conservative leverage. The return on equity (ROE) has weakened from 9.2% in 2023 to -2.5% in 2024, reflecting profitability issues. However, the equity ratio increased from 61.5% in 2023 to 64.1% in 2024, suggesting a solid equity base. Overall, the company maintains a strong balance sheet, but profitability concerns remain.65
Positive
Cash Flow
Cash flow analysis highlights strong cash management. Free cash flow increased significantly, from $321 million in 2023 to $1,097 million in 2024, showing a growth rate of 241.8%. The operating cash flow to net income ratio is high at -6.49, indicating robust cash generation relative to net income. Free cash flow to net income ratio is also strong at -4.14, emphasizing effective cash flow management despite profitability challenges.77
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 6.75B | 7.39B | 8.11B | 6.58B | 4.85B | Gross Profit |
| 1.65B | 2.10B | 2.24B | 1.01B | -712.72M | EBIT |
| -214.00M | 1.13B | 1.17B | -68.00M | -1.50B | EBITDA |
| 1.54B | 2.64B | 3.27B | 1.56B | 1.31B | Net Income Common Stockholders |
| -265.00M | 1.02B | 1.45B | -254.00M | -1.35B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.39B | 3.47B | 2.97B | 2.94B | 908.08M | Total Assets |
| 16.80B | 18.04B | 17.84B | 15.03B | 12.32B | Total Debt |
| 2.32B | 2.75B | 2.51B | 2.01B | 2.80B | Net Debt |
| 128.00M | 367.00M | 159.00M | -926.00M | 1.89B | Total Liabilities |
| 5.97B | 6.89B | 7.88B | 7.00B | 5.08B | Stockholders Equity |
| 10.78B | 11.10B | 9.91B | 8.03B | 7.18B |
| Cash Flow | Free Cash Flow | |||
| 1.10B | 321.00M | -435.00M | 1.07B | 413.41M | Operating Cash Flow |
| 1.72B | 2.13B | 2.62B | 2.84B | 1.01B | Investing Cash Flow |
| -1.13B | -1.88B | -4.06B | -1.45B | -366.17M | Financing Cash Flow |
| -785.00M | -212.00M | 842.00M | 650.00M | -732.74M |
GlobalFoundries Inc Technical Analysis
Positive
37.73
Price Trends
35.78
Positive
38.06
Negative
40.00
Negative
Market Momentum
0.24
Positive
54.60
Neutral
62.43
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GFS, the sentiment is Positive. The current price of 37.73 is below the 20-day moving average (MA) of 37.83, above the 50-day MA of 35.78, and below the 200-day MA of 40.00, indicating a neutral trend. The MACD of 0.24 indicates Positive momentum. The RSI at 54.60 is Neutral, neither overbought nor oversold. The STOCH value of 62.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GFS.
GlobalFoundries Inc Risk Analysis
GlobalFoundries Inc disclosed 66 risk factors in its most recent earnings report. GlobalFoundries Inc reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
We have significant exposure to the Secured Overnight Financing Rate ("SOFR") and other floating interest rates and fluctuations in interest rates may have adverse effects on our financial condition and results of operations. Q4, 2023
2.
Our management has identified material weaknesses in our ICFR and has concluded that our ICFR was not effective as of December 31, 2023, which may have a material adverse result on our results of operation and financial condition for future periods. Q4, 2023
3.
If we are unable to successfully deploy AI/ML across our products and services and our business operations and adequately anticipate and account for legal, regulatory and social developments in the AI/ML space, we may become less competitive against our peers and we may incur significant costs that do not provide us with commensurate returns. Q4, 2023
GlobalFoundries Inc Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $19.00B | 13.64 | 11.65% | 4.59% | 2.22% | -22.39% | |
71 Outperform | $25.76B | 24.11 | 6.33% | 1.07% | -25.35% | -70.00% | |
70 Outperform | $20.18B | 19.81 | 11.47% | 2.37% | 1.32% | 4.86% | |
65 Neutral | $20.70B | 34.80 | 7.85% | ― | -18.28% | -70.98% | |
64 Neutral | $35.20B | 84.25 | >-0.01% | 2.79% | -42.35% | -100.12% | |
62 Neutral | $11.80B | 10.37 | -7.29% | 2.91% | 7.39% | -7.96% | |
60 Neutral | $20.86B | 28.15 | -1.69% | ― | -4.42% | -120.96% |
* Technology Sector Average
Performance Comparison
GFS
GlobalFoundries Inc
37.73
-9.94
-20.85%
ASX
ASE Technology Holding Co
9.70
-1.20
-11.01%
MCHP
Microchip
65.25
-26.49
-28.88%
ON
ON Semiconductor
50.17
-23.33
-31.74%
STM
STMicroelectronics
28.45
-15.41
-35.13%
UMC
United Micro
7.63
-0.64
-7.74%
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.