GlobalFoundries (GFS): Evaluating Valuation After New GaN and Space-Chip Deals with Navitas and BAE Systems

GlobalFoundries (GFS) just put two stakes in the ground: a long term GaN partnership with Navitas aimed at AI datacenters and energy infrastructure, plus new FinFET space chips with BAE Systems.

See our latest analysis for GlobalFoundries.

These deals have helped the mood around GlobalFoundries, with the 90 day share price return of 11.4 percent contrasting with a still weak 12 month total shareholder return of minus 16.3 percent. This suggests momentum may be turning after a tougher stretch.

If you like the strategic angle but want more options, this could be a good moment to explore high growth tech and AI stocks for other chip and AI exposed names riding similar themes.

Yet with shares still down double digits over 12 months and trading only slightly below analyst targets, investors have to ask whether GlobalFoundries is quietly undervalued or if the market is already pricing in its next leg of growth.

Most Popular Narrative Narrative: 6% Undervalued

With GlobalFoundries last closing at $37.13 against a narrative fair value just above $39, the story tilts slightly in favor of upside from here.

The company's focus on differentiated technologies (such as FD SOI, RF, and power management platforms) and recent MIPS acquisition strengthens its value proposition in edge AI, automotive, and data center markets, deepening customer partnerships and enabling premium pricing, which is likely to drive sustained improvements in revenue visibility and margin stability.

Read the complete narrative.

Curious how moderate revenue growth assumptions, sharply higher margins, and a future earnings multiple usually reserved for sector leaders all pull together into that fair value? The narrative lays out the full profit roadmap, the embedded earnings step change, and the implied re rating the market would need to buy into.

Result: Fair Value of $39.43 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the narrative could be challenged if capital intensive capacity expansions crimp free cash flow, or if limited leading edge exposure caps long term growth.

Find out about the key risks to this GlobalFoundries narrative.

Another View: Market Ratio Says Overvalued

Our SWS fair ratio suggests GlobalFoundries should trade closer to 2.4 times sales; the market, however, sits at roughly 3 times, richer than that fair ratio even if still cheaper than many peers. If sentiment cools, does that premium leave downside risk rather than hidden value?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out GlobalFoundries for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 925 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own GlobalFoundries Narrative

And if you see the numbers differently or simply prefer to dig into the data yourself, you can build a custom view in just a few minutes, then Do it your way.

A good starting point is our analysis highlighting 1 key reward investors are optimistic about regarding GlobalFoundries.

Ready for more smart ideas?

Do not stop at a single opportunity. Use the Simply Wall Street Screener to uncover fresh, data backed ideas before the crowd spots them.

• Target dependable income by reviewing these 14 dividend stocks with yields > 3% that combine attractive yields with balance sheets built to support long term payouts.
• Accelerate your growth focus by scanning these 24 AI penny stocks positioned at the forefront of machine learning, automation, and real world AI adoption.
• Capitalize on mispriced potential by monitoring these 925 undervalued stocks based on cash flows where market expectations lag behind intrinsic cash flow strength.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com