GlobalFoundries Inc (NASDAQ:GFS) is entering a period of accelerating momentum as it benefits from a cyclical recovery, US manufacturing onshoring, and growing demand for differentiated semiconductor technologies, according to Baird analysts.
Following the company’s Q3 earnings, the analysts maintained their ‘Outperform’ rating on GlobalFoundries with a $40 price target, citing the company’s strong positioning at the intersection of several key secular trends, “notably US onshoring and the rebuild of US-based semiconductor manufacturing capacity, along with the ramp of differentiated technologies serving higher-margin platforms including AI-driven optical networking.”
Shares traded down 5.5% at about $32 on Thursday.
Jefferies said that following a cycle trough and pricing reset, GlobalFoundries “is poised to post a cyclical recovery likely outpacing peers while new design wins are surging.”
GlobalFoundries expects its optical networking served available market to grow at a 40% compound annual rate through 2030, leveraging its Silicon Photonics, Silicon Germanium, and FDX technologies.
The analysts noted that Silicon Photonics revenue is on pace to reach over $200 million in 2025, nearly doubling year over year, and is expected to become a $1 billion run-rate business by the end of the decade as AI demand drives adoption of pluggable optical transceivers and co-packaged optics. They added that gross margins for Silicon Photonics are significantly above the company’s target model.
Further, GlobalFoundries sees a total addressable market of more than $18 billion for physical AI by 2030, with technologies including FDX, FinFET, BCD, and BCDHV, along with embedded nonvolatile memory, positioning the company well to capture share across that market.
The firm highlighted onshoring as a major long-term growth driver for the company. “So far eight customers worth $15–$20 billion of TAM—Apple, SpaceX, AMD, Qualcomm, NXP, GM, Cirrus Logic, and Silicon Labs—are engaged in US-reshoring capacity, with ramps starting in 2027,” the analysts wrote.
They added that GlobalFoundries is expanding manufacturing capacity across its US and German facilities to meet that demand.
In the third quarter, the company reported non-GAAP earnings per share of $0.41, above guidance of $0.38, on revenue of $1.69 billion, which was flat sequentially and near the high end of its forecast range. Non-GAAP gross margin was 26%, up 0.8% from the prior quarter and above guidance.
For the fourth quarter, GlobalFoundries guided revenue between $1.78 billion and $1.83 billion, above Jefferies’ previous estimate of $1.72 billion, with a midpoint that exceeds consensus of $1.79 billion. The company also guided pro forma gross margin to 28.5%, above Jefferies’ prior expectation of 27.2% and consensus of 28.2%.
The analysts noted that the company secured nearly 150 new design wins in the third quarter of 2025, including three optical networking projects representing about $150 million in projected lifetime revenue. Total design wins increased more than 50% year over year, and 90% of wins over the past four quarters were sole-sourced to GlobalFoundries.
Additionally, Jefferies noted that utilization rates remained stable in the mid-80% range, up from the low 80s earlier in the year, and that smartphone pricing resets are complete with new multi-year contracts now in place.