GlobalFoundries beats estimates, bets big on Physical AI as data center chips fuel growth

GlobalFoundries Exceeds Wall Street Expectations with Strong Quarter

GlobalFoundries (GFS) delivered fourth-quarter revenue of $1.83 billion, surpassing analyst estimates of $1.80 billion, while posting adjusted earnings per share of 55 cents compared to the 47 cents consensus 1

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. The contract chipmaker's performance sent shares surging over 15% in trading, approaching its 52-week high of $48.56. Looking ahead, the company forecast first-quarter revenue of $1.63 billion, plus or minus $25 million, above the $1.61 billion analyst estimates, signaling sustained momentum in the artificial intelligence infrastructure sector 1

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Data Centers Drive Revenue Growth Through Silicon Photonics

The semiconductor manufacturer has been strategically shifting to capitalize on chips demand from data centers, particularly through specialized technologies that enable high-speed data transfer. GlobalFoundries doubled silicon photonics revenue to over $200 million in 2024 and expects it to nearly double again in 2025, with projections to reach a $1 billion annual run-rate by 2028 1

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. This technology uses pulses of light to transmit data, addressing critical infrastructure needs as AI workloads expand. The company's communications infrastructure and data center segment grew 32% year-over-year to $225 million, demonstrating strong demand in this high-growth category 2

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. To accelerate this trajectory, GlobalFoundries acquired Advanced Micro Foundry in November, a Singapore-based chipmaker specializing in silicon photonics technology 1

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Physical AI Emerges as Next Major Growth Bet

CEO Tim Breen positioned the company at a pivotal inflection point during the earnings call, emphasizing a strategic pivot from traditional foundry operations to becoming a technology solutions provider focused on Physical AI 2

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. This vision involves integrating intelligence into real-world devices such as autonomous vehicles and industrial robotics, which Breen believes will eventually surpass data centers in market scale. Recent acquisitions of MIPS and Synopsys' processor IP business enable GlobalFoundries to offer specialized RISC-V and AI cores, combining design capabilities with a three-continent manufacturing footprint. Management identified a massive $3 billion opportunity driven by semiconductor onshoring and demand for "non-China, non-Taiwan" sourcing strategies 2

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Share Buyback Program and Financial Performance

GlobalFoundries' board approved a share buyback program authorizing up to $500 million in common stock repurchases, signaling confidence in the company's financial position and future prospects 1

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. The company reported an adjusted gross margin of 29.0%, up 360 basis points year-over-year, while the adjusted operating margin increased 270 basis points to 18.3% 2

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. CFO Sam Franklin outlined a roadmap toward higher profitability through disciplined reinvestment and a "richer mix" of business, targeting a return to 30% gross margin in 2026. As of December 31, 2025, GlobalFoundries generated $374 million in operating cash flow and held $4 billion in cash and equivalents, providing substantial financial flexibility 2

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. The automotive segment achieved record annual revenue, growing 3% year-over-year to $427 million in the fourth quarter, while non-wafer revenue surged 42% to $218 million 2

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