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GlobalFoundries Q2 Earnings Call Highlights AI Data Center Momentum
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Key Takeaways
GFS raised its 2026 communications and data center growth outlook to 50%-60% as Q2 revenues jumped over 60%.
GFS secured seven optical design wins and expects silicon photonics revenues to more than double in 2026.
GFS lifted Q2 non-IFRS gross margin to 29.9% and now expects about 30% for 2026, led mainly by mix.
GlobalFoundries Inc. (GFS - Free Report) used its second-quarter 2026 earnings call to emphasize accelerating optical networking demand, broader AI data center opportunities and improving profitability through a richer business mix.
The company’s second-quarter non-IFRS earnings of 46 cents per share topped the Zacks Consensus Estimate of 44 cents. Revenues of $1.79 billion also beat the $1.76 billion estimate. The call centered on capacity, technology investments and growth beyond traditional foundry services.
GlobalFoundries Inc. Price, Consensus and EPS Surprise
Communications infrastructure and data center revenues rose more than 60% year over year, driven by silicon photonics and silicon germanium demand.
GlobalFoundries now expects 2026 revenue growth of 50% to 60% for that end market, up from its prior high-30% outlook. The business represented about 16% of second-quarter revenues, with customer demand supporting further investment in high-margin technology corridors.
GlobalFoundries Builds Optical Capacity
The company secured seven optical networking design wins during the quarter and now expects silicon photonics revenues to more than double in 2026.
Asked by a Wolfe Research analyst about expansion timing, chief executive Tim Breen said capacity can be added within existing fabs, allowing GlobalFoundries to increase output without constructing another facility.
A TD Cowen analyst pressed management on the sharp outlook increase. Breen said validation across customers and hyperscalers strengthened confidence, while manufacturing productivity improvements should support higher shipments through 2027.
GFS Leans on Mix to Lift Margins
Non-IFRS gross margin reached 29.9%, up 470 basis points year over year, as technology services, stronger manufacturing mix, cost improvements and utilization supported profitability.
GlobalFoundries now expects full-year gross margin of about 30%, rather than merely reaching that level exiting 2026.
During the Q&A, chief financial officer Sam Franklin told a Cantor Fitzgerald analyst that mix remains the largest margin driver. He also cited roughly 10 percentage points of available utilization, structural cost reductions and pricing increases scheduled to begin affecting revenues in 2027.
GlobalFoundries Expands IP and Power
Breen said the completed acquisition of Synopsys’ ARC Processor IP Solutions business deepens the company’s RISC-V, software and custom silicon capabilities.
Franklin said MIPS and ARC are expected to contribute $100 million to $120 million to 2026 technology services revenue, above the prior $60 million to $100 million range.
Breen also highlighted the acquired integrated voltage regulator team as a way to move power conversion closer to AI processors. He said the capability complements GlobalFoundries’ BCD, GaN and integrated inductor portfolio.
GFS Balances End-Market Shifts
Franklin said automotive revenues fell 10% year over year because of customer shipment timing, but management maintained its low-double-digit 2026 growth outlook with greater fourth-quarter weighting.
Smart mobile device revenues declined 6%, and Franklin now expects a low-teens full-year decrease as handset forecasts weakened amid memory pricing and shortages.
Home and industrial IoT improved 10% year over year. Franklin raised the 2026 growth outlook to 10% to 15%, citing normalized inventory, better demand signals and new production ramps.
GlobalFoundries Funds Growth and Returns Cash
Franklin guided third-quarter revenues to $1.885 billion, plus or minus $25 million, with non-IFRS gross margin of 30.5%, plus or minus 100 basis points.
He projected non-IFRS earnings of 51 cents per share, plus or minus 5 cents, and said second-half operating expenses should remain near the third-quarter level as R&D investment rises.
Franklin also reaffirmed an adjusted free cash flow margin of about 10% for 2026. The board approved another 12-cent quarterly dividend, while roughly $100 million remains under the share repurchase authorization.
GFS Leaves the Call Focused on Execution
Breen’s tone remained confident on optical networking, quantum manufacturing and physical AI, but he repeatedly tied growth to the pace of capacity additions and factory productivity.
Franklin framed the next phase around mix improvement, disciplined investment and cost execution, with higher-value technologies carrying more weight in revenue and margins.
What Zacks Rank & Style Scores Signal for GlobalFoundries
GFS currently carries a Zacks Rank #3 (Hold), a less favorable designation than the Zacks Rank #1 (Strong Buy) or 2 (Buy) ratings that pair most strongly with A or B Style Scores. Its Momentum Score of A is favorable, while Value and Growth Scores of C are middle-tier readings. You can see the complete list of today’s Zacks #1 Rank stocks here.
The VGM Score of B reflects a favorable combined profile across value, growth and momentum, though the overall signal remains balanced alongside the Hold rank. The Zacks Rank can change as analyst estimates are revised following the just-reported results.
View the Zacks #1 Rank List
Image: Bigstock
GlobalFoundries Q2 Earnings Call Highlights AI Data Center Momentum
Key Takeaways
GlobalFoundries Inc. (GFS - Free Report) used its second-quarter 2026 earnings call to emphasize accelerating optical networking demand, broader AI data center opportunities and improving profitability through a richer business mix.
The company’s second-quarter non-IFRS earnings of 46 cents per share topped the Zacks Consensus Estimate of 44 cents. Revenues of $1.79 billion also beat the $1.76 billion estimate. The call centered on capacity, technology investments and growth beyond traditional foundry services.
GlobalFoundries Inc. Price, Consensus and EPS Surprise
GlobalFoundries Inc. price-consensus-eps-surprise-chart | GlobalFoundries Inc. Quote
GFS Raises Its Data Center Outlook
Communications infrastructure and data center revenues rose more than 60% year over year, driven by silicon photonics and silicon germanium demand.
GlobalFoundries now expects 2026 revenue growth of 50% to 60% for that end market, up from its prior high-30% outlook. The business represented about 16% of second-quarter revenues, with customer demand supporting further investment in high-margin technology corridors.
GlobalFoundries Builds Optical Capacity
The company secured seven optical networking design wins during the quarter and now expects silicon photonics revenues to more than double in 2026.
Asked by a Wolfe Research analyst about expansion timing, chief executive Tim Breen said capacity can be added within existing fabs, allowing GlobalFoundries to increase output without constructing another facility.
A TD Cowen analyst pressed management on the sharp outlook increase. Breen said validation across customers and hyperscalers strengthened confidence, while manufacturing productivity improvements should support higher shipments through 2027.
GFS Leans on Mix to Lift Margins
Non-IFRS gross margin reached 29.9%, up 470 basis points year over year, as technology services, stronger manufacturing mix, cost improvements and utilization supported profitability.
GlobalFoundries now expects full-year gross margin of about 30%, rather than merely reaching that level exiting 2026.
During the Q&A, chief financial officer Sam Franklin told a Cantor Fitzgerald analyst that mix remains the largest margin driver. He also cited roughly 10 percentage points of available utilization, structural cost reductions and pricing increases scheduled to begin affecting revenues in 2027.
GlobalFoundries Expands IP and Power
Breen said the completed acquisition of Synopsys’ ARC Processor IP Solutions business deepens the company’s RISC-V, software and custom silicon capabilities.
Franklin said MIPS and ARC are expected to contribute $100 million to $120 million to 2026 technology services revenue, above the prior $60 million to $100 million range.
Breen also highlighted the acquired integrated voltage regulator team as a way to move power conversion closer to AI processors. He said the capability complements GlobalFoundries’ BCD, GaN and integrated inductor portfolio.
GFS Balances End-Market Shifts
Franklin said automotive revenues fell 10% year over year because of customer shipment timing, but management maintained its low-double-digit 2026 growth outlook with greater fourth-quarter weighting.
Smart mobile device revenues declined 6%, and Franklin now expects a low-teens full-year decrease as handset forecasts weakened amid memory pricing and shortages.
Home and industrial IoT improved 10% year over year. Franklin raised the 2026 growth outlook to 10% to 15%, citing normalized inventory, better demand signals and new production ramps.
GlobalFoundries Funds Growth and Returns Cash
Franklin guided third-quarter revenues to $1.885 billion, plus or minus $25 million, with non-IFRS gross margin of 30.5%, plus or minus 100 basis points.
He projected non-IFRS earnings of 51 cents per share, plus or minus 5 cents, and said second-half operating expenses should remain near the third-quarter level as R&D investment rises.
Franklin also reaffirmed an adjusted free cash flow margin of about 10% for 2026. The board approved another 12-cent quarterly dividend, while roughly $100 million remains under the share repurchase authorization.
GFS Leaves the Call Focused on Execution
Breen’s tone remained confident on optical networking, quantum manufacturing and physical AI, but he repeatedly tied growth to the pace of capacity additions and factory productivity.
Franklin framed the next phase around mix improvement, disciplined investment and cost execution, with higher-value technologies carrying more weight in revenue and margins.
What Zacks Rank & Style Scores Signal for GlobalFoundries
GFS currently carries a Zacks Rank #3 (Hold), a less favorable designation than the Zacks Rank #1 (Strong Buy) or 2 (Buy) ratings that pair most strongly with A or B Style Scores. Its Momentum Score of A is favorable, while Value and Growth Scores of C are middle-tier readings. You can see the complete list of today’s Zacks #1 Rank stocks here.
The VGM Score of B reflects a favorable combined profile across value, growth and momentum, though the overall signal remains balanced alongside the Hold rank. The Zacks Rank can change as analyst estimates are revised following the just-reported results.