GlobalFoundries' 2026 Hopes Are 'Too Optimistic,' Analyst Says

Core Insights - GlobalFoundries Inc delivered steady September-quarter results and issued upbeat guidance for the December quarter, highlighting progress in diversification and margin expansion strategy [1] - The company is experiencing strong momentum in automotive and data center demand, with growth driven by silicon photonics and satellite communications [1] Financial Performance - The September-quarter performance was solid, with guidance for the December quarter being modestly better than expected, supported by improving cyclical trends [3] - December-quarter guidance implies a year-over-year margin gain of about 300 basis points to 28.5%, despite flat revenues [7] - Projected fourth-quarter revenue is $1.80 billion with adjusted EPS of $0.47 [8] Segment Analysis - The Communications Infrastructure and Datacenter (CID) segment is leading year-over-year growth in 2025, driven by strong demand for optical interconnects in AI infrastructure, which is expected to double silicon photonics revenue this year [4] - The Automotive segment is expected to see mid-teens growth in 2025, with further strength projected into 2026 [5] - The IoT business is under pressure due to slow industrial recovery and weak consumer spending, but growth is expected to improve in the latter half of 2026 [5] - Smart Mobile Devices, contributing roughly 45% of September quarter revenue, is facing near-term growth challenges due to pricing adjustments with major customers, but these adjustments are expected to lead to higher wafer volumes and market share gains [6] Market Outlook - The March quarter is expected to show typical seasonal declines of 10–12% sequentially, reflecting sluggish recovery across end markets, followed by stronger growth later in the year [8] - Analyst noted that Street expectations for 2026 may have been overly optimistic given the slow pace of recovery across several end markets [3]