GlobalFoundries Stock Rips 15%, CEO highlighs 'Physical AI' Bet

GlobalFoundries (NASDAQ:GFS) stock gained after it reported fiscal fourth-quarter 2025 results on Wednesday.

The company reported a revenue of $1.830 billion, flat year-over-year, topping the analyst consensus estimate of $1.803 billion.

The contract chipmaker's adjusted EPS of 55 cents beat the analyst consensus estimate of 47 cents. 

Segment Highlights

Smart mobile device revenue declined 11% from a year ago to $657 million. Communications infrastructure & data center revenue grew 32% Y/Y to $225 million. Home and industrial IOT revenue decreased 15% Y/Y to $303 million.

Automotive revenue rose 3% Y/Y to $427 million. Non-wafer revenue grew 42% Y/Y to $218 million.

Margins and Buyback

The adjusted gross margin rose 360 bps Y/Y to 29.0%. The adjusted operating margin increased by 270 bps to 18.3%.

The adjusted EBITDA margin declined by 110 bps Y/Y to 35.0%. 

As of December 31, 2025, GlobalFoundries generated $374 million in operating cash flow and held $4 billion in cash and equivalents.

GlobalFoundries’ board of directors approved a share buyback approval of up to $500 million of its common stock.

Conference Call Highlights

During the earnings call, GlobalFoundries leadership presented the company as being at a pivotal “inflection point,” transitioning from a traditional foundry to a holistic technology solutions provider.

CEO Tim Breen emphasized that while the current data center boom is significant, the company is strategically betting on “Physical AI”—the integration of intelligence into real-world devices like autonomous vehicles and industrial robotics—which he believes will eventually outstrip the data center market in scale.

This shift is supported by recent acquisitions, such as MIPS and Synopsys' processor IP business, which allow the company to offer specialized RISC-V and AI cores.

By combining these design capabilities with their three-continent manufacturing footprint, the company aims to capture a massive $3 billion opportunity driven by global semiconductor onshoring and the demand for “non-China, non-Taiwan” sourcing.

On the financial front, CFO Sam Franklin detailed a roadmap toward higher profitability through disciplined reinvestment and a “richer mix” of business.

The company highlighted record annual revenue in its automotive segment and a doubling of silicon photonics revenue, which is projected to reach a $1 billion annual run-rate by 2028.

Despite facing potential risks such as supply chain disruptions and shifting global regulations, management expressed high confidence in their trajectory, targeting a return to a 30% gross margin in 2026.

Outlook

GlobalFoundries expects first-quarter revenue of $1.600 billion-$1.650 billion versus the $1.611 billion analyst consensus estimate.

The company expects adjusted EPS of 30 cents to 40 cents versus the 34 cents analyst consensus estimate.

GFS Price Action: Globalfoundries shares were up 15.20% at $48.27 at the time of publication on Wednesday. The stock is trading near its 52-week high of $48.56, according to Benzinga Pro data.

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