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GlobalFoundries Inc. (GFS - Free Report) ) is one of the leading semiconductor foundries on the planet. But the stock has underperformed the chip market in 2023 and its earnings outlook is trending in the wrong direction.
The Basics
The U.S. is increasingly focused on onshoring more chip manufacturing, especially with the world’s largest foundry, Taiwan Semiconductor (TSM - Free Report) , possibly coming under pressure from the Chinese government at some point in the future. GlobalFoundries is a much smaller U.S.-based player in the vital chip manufacturing or foundry segment.
GlobalFoundries is poised to gain momentum and market share as those in power realize the U.S. must play a larger role in actual chip manufacturing. GFS, which builds chips in the U.S. and other countries outside of China and Taiwan, works across a wide spectrum of semiconductor categories.
Image Source: Zacks Investment Research
GlobalFoundries is exposed to growth in mobile devices, data centers, IoT, automotive, and beyond. Originally an AMD spinoff, GlobalFoundries found early success after its October 2021 IPO.
The stock has bounced around since then, with GlobalFoundries down 1% since the middle of November 2021. Narrowing our view, GFS shares are up 17% YTD and 45% over the last 12 months, which lags its industry’s climb. The stock is also currently trading above both its 200-day and 50-day moving averages.
GlobalFoundries posted 23% revenue growth in 2022, but it faces near-term headwinds in the historically cyclical chip industry.
Zacks estimates call for the company’s adjusted earnings to slip 30% YoY to $2.18 per share on around 7% lower revenue. The nearby chart also shows that GlobalFoundries FY23 and FY24 consensus earnings estimates have faded recently, down 8% and 10%, respectively.
Bottom Line
GlobalFoundries lands a Zacks Rank #5 (Strong Sell) at the moment given its downward earnings revisions. GlobalFoundries also earns an “F” grade for Value and a “D” for Momentum in our Style Scores system right now.
Semiconductors are one of the backbones of the economy. GlobalFoundries could, therefore, be a solid longer-term play, but its earnings and revenue are projected to slide in 2023 and its earnings revisions have continued to trend in the wrong direction.
It might be best for investors to look beyond GlobalFoundries right now to some of the many other semiconductor stocks that are currently sitting at Zacks Rank #1 (Strong Buys) or #2 (Buys).
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Bear of the Day: GlobalFoundries Inc. (GFS)
GlobalFoundries Inc. (GFS - Free Report) ) is one of the leading semiconductor foundries on the planet. But the stock has underperformed the chip market in 2023 and its earnings outlook is trending in the wrong direction.
The Basics
The U.S. is increasingly focused on onshoring more chip manufacturing, especially with the world’s largest foundry, Taiwan Semiconductor (TSM - Free Report) , possibly coming under pressure from the Chinese government at some point in the future. GlobalFoundries is a much smaller U.S.-based player in the vital chip manufacturing or foundry segment.
GlobalFoundries is poised to gain momentum and market share as those in power realize the U.S. must play a larger role in actual chip manufacturing. GFS, which builds chips in the U.S. and other countries outside of China and Taiwan, works across a wide spectrum of semiconductor categories.
Image Source: Zacks Investment Research
GlobalFoundries is exposed to growth in mobile devices, data centers, IoT, automotive, and beyond. Originally an AMD spinoff, GlobalFoundries found early success after its October 2021 IPO.
The stock has bounced around since then, with GlobalFoundries down 1% since the middle of November 2021. Narrowing our view, GFS shares are up 17% YTD and 45% over the last 12 months, which lags its industry’s climb. The stock is also currently trading above both its 200-day and 50-day moving averages.
GlobalFoundries posted 23% revenue growth in 2022, but it faces near-term headwinds in the historically cyclical chip industry.
Zacks estimates call for the company’s adjusted earnings to slip 30% YoY to $2.18 per share on around 7% lower revenue. The nearby chart also shows that GlobalFoundries FY23 and FY24 consensus earnings estimates have faded recently, down 8% and 10%, respectively.
Bottom Line
GlobalFoundries lands a Zacks Rank #5 (Strong Sell) at the moment given its downward earnings revisions. GlobalFoundries also earns an “F” grade for Value and a “D” for Momentum in our Style Scores system right now.
Semiconductors are one of the backbones of the economy. GlobalFoundries could, therefore, be a solid longer-term play, but its earnings and revenue are projected to slide in 2023 and its earnings revisions have continued to trend in the wrong direction.
It might be best for investors to look beyond GlobalFoundries right now to some of the many other semiconductor stocks that are currently sitting at Zacks Rank #1 (Strong Buys) or #2 (Buys).