TLDR
- GlobalFoundries is targeting gross margins of 30% in 2026, 40% by end of 2028 and 45% long term, driven by product mix, tech services and manufacturing efficiency.
- Silicon photonics is a key growth area, with a $1B run rate target exiting 2028 and a $2B longer-term goal, focused on data center demand.
- Capital spending is rising to $1.3B–$1.4B this year, up from a net CapEx rate of 7–10% of revenue in recent years.
- Chief Strategy Officer Michael Hogan sold 2,800 GFS stock at $82.88 on May 27, totaling $232,064, under a pre-arranged 10b5-1 plan.
- GFS beat Q1 2026 earnings with EPS of $0.40 vs. $0.35 expected, revenue of $1.63B, and declared a $0.12 quarterly dividend.
GlobalFoundries (GFS) stock was trading at $79.40, down about 1.5%, at the time of reporting. The stock has ranged between $31.51 and $92.55 over the past 12 months — a range that tells its own story.
CFO Sam Franklin laid out a detailed margin roadmap at a TD Cowen event this week. The company is targeting an exit gross margin of roughly 30% in 2026, rising to 40% by end of 2028, with a longer-term goal of 45%.
Franklin said the roughly 10-point improvement from 2026 to 2028 comes down to four drivers: product mix, technology services, manufacturing efficiency and scale. Mix alone could contribute about five margin points, he said.
Communications infrastructure and data center revenue grew just under 30% last year and roughly 32% in Q1 2026. Franklin expects that segment to grow in the high-30% range for the full year.
Technology services — historically 8–10% of revenue — came in above 13% in Q1 and are expected to settle between 12–14% long term. The company’s acquisition of MIPS and the pending deal for Synopsys’ ARC IP business are part of a push into RISC-V capabilities.
Silicon Photonics Takes Center Stage
Franklin outlined two phases of silicon photonics growth. The first is pluggable optical transceivers, where GlobalFoundries says it holds a strong position following its acquisition of AMF last year.
The second phase is co-packaged optics, with an expected inflection in late 2028 into 2029. The company is targeting $1B in silicon photonics revenue exiting 2028, and $2B over the longer term.
Franklin said GlobalFoundries and TSMC are the only companies with “fully fledged” co-packaged optics solutions currently taping out in the market. The company recorded two tape-outs on its co-packaged optics solution in Q1 alone.
Capital spending is being raised to $1.3B–$1.4B this year, representing 15–20% of revenue — up from 7–10% in recent years. Franklin said silicon photonics is a major recipient, but not the only one. FDX solutions and silicon germanium for data center transimpedance amplifier drivers also received mention.
On satellite comms, low Earth orbit revenue is expected to hit around $100M in 2025, up from essentially zero in 2024. The company also flagged a $375M CHIPS R&D grant tied to quantum computing as a “strong endorsement” of its role in the sector.
Insider Sale and Capital Returns
On May 27, Chief Strategy Officer Michael Hogan sold 2,800 GFS at an average of $82.88, totaling $232,064. The transaction was executed under a pre-arranged Rule 10b5-1 plan. Hogan has made a series of sales going back to March, with prices ranging from $43.25 to $82.88.
GlobalFoundries also declared a quarterly dividend of $0.12 per share, payable July 14, with a record date of June 24. The board approved $500M in buybacks at the start of the year, of which roughly $400M has been completed.
Eight analysts currently rate GFS a Buy, eleven a Hold and one a Sell. The average price target sits at $69.88.
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