GlobalFoundries Stock Hits Bottom: Is a Rebound Coming?

Key Points

• GlobalFoundries' stock price hit bottom in April and is setting up for a rebound that could begin before the 2nd half. 
• The company is well-positioned to benefit from shifting supply-chain needs among semiconductor end-markets.
• Sell-side activity is a hurdle in 2025 but may revert to a tailwind as the year progresses. 

GlobalFoundries NASDAQ: GFS stock hit bottom in early Q2 2025, and a rebound is coming. The protracted downtrend and move to long-term lows were driven by a sustained contraction in business that is now over. The rebound can begin because the company’s Q1 results reveal a return to growth and a forecast for acceleration.

How high can it go in the near, mid, and long term? The initial analyst's reaction is a tepid response from a single firm, lowering the price target to near early May trading levels. However, the broader consensus implies a more robust move to the $48 level that could be achieved by mid-2026. 

GlobalFoudries Outperforms and Raises Guidance for Q2

GlobalFoundries did not have a robust quarter in Q1, but the $1.59 billion is worth 2.6% in year-over-year (YOY) growth, the first YOY increase in eight quarters, sufficient to outpace MarketBeat’s consensus by 60 basis points. The company reports growth in critical end markets, including automotive, industrial, IoT, and photonics, a crucial sector for AI. Photonics uses light and photons to transmit data, increasing performance for high-intensity workloads.

The automotive segment grew 10%, while the communications segment jumped 45%.

Margin is another area of strength. The company experienced margin pressure but was able to mitigate it to a degree. The net result is a contracting gross margin offset by improved operating expense and outperformance on the bottom line.

Net income increased by 57%, leaving adjusted earnings above consensus forecasts and the company in a healthy financial condition. Balance sheet highlights at the end of the quarter include reduced cash, assets, and liabilities, with liabilities running at less than 0.5x equity and equity up 2.5%. 

The guidance is equally tepid but no less critical for the stock price direction because of growth, acceleration, and potential for outperformance. The company guided in alignment with the analyst's consensus for a 2.75% YOY growth and may easily outpace the consensus.

The macroeconomic trade environment has semiconductor end-markets scrambling to find alternative sources, and GlobalFoundries is well-positioned to benefit from this. The company’s fabs are located in Singapore, Europe, and the U.S., with expansion underway in the United States.

Sell-Side Activity A Hurdle for 2025

The sell-side activity aligns with the idea that this stock is at a bottom and could rebound soon, but the timing is questionable. Trends in early May include moderately high but declining short interest, a Moderate Buy rating from analysts with a bullish bias, and buying among institutions. However, the analysts' support is dubious, with price targets falling and leading to the low-end range, the floor for action in 2025. 

Likewise, institutional activity is bullish and provides a tailwind for the market. Still, it is weak, with total ownership of less than 20% and trailing-twelve-month inflows equal to less than 3.5% of the market cap. Shares are near long-term lows. Nearly all the remaining shares are owned by Mubadala Investment Company, the state-owned investment company of the United Arab Emirates. 

The Technical Outlook: GFS Stock at Bottom but Below Critical Resistance

The technical picture suggests GFS stock reached its bottom in early April and began to rebound. However, the market remains below the critical resistance target, the prior support line. The market will soon retest this level at nearly $37.50, but it may not move higher until later in the year.

The price for this stock will remain range-bound near current levels, with a chance of hitting new lows in that scenario. A price movement above $37.50 would be a bullish signal, potentially sending this market into the $40 to $45 range.