I believe Global Foundries ($GFS) to be an underdiscussed and undervalued sleeping giant.
Full disclosure, 10% of my portfolio is allocated to GFS, and I will do my best to lay out my side of the argument and I am open to hearing others.
GFS is a major player is the ever growing semi-conductor market. I live locally and have personally witnessed the massive growth this company has seen.
There is a growing demand for semi-conductors from not only the home and office computing aspect, but with national security/defense, electric vehicles, data centers, and more. Almost everything we use and will need to use in the future runs on these chips.
The U.S and Europe specifically have been put into this position where moving toward chip independence can no longer be placed on the back burner and must be prioritized. The U.S. Senate on 3/27 approved a bill to provide $52 billion in U.S. subsidies for semiconductor chips manufacturing
TSMC has been a large provider of chips for a variety of companies and countries however with the current geopolitical state with China and Russia it is becoming a less risk adverse play due to being located in Taiwan which leads me to Global Foundries.
Since we cant see the financials of the future lets see how they performed last year
Fourth Quarter 2021 Financial Highlights
Record revenue of $1.85 billion, up 9% sequentially. Record gross margin of 20.8% and adjusted gross margin of 21.5%. Record operating margin of 5% and adjusted operating margin of 8%. Net income margin of 2% and adjusted EBITDA margin of 32%. Cash and cash equivalents of $2.9 billion.
Full Year 2021 Highlights Revenue of $6.6 billion, up 36% year-over-year. Record gross margin of 15% and adjusted gross margin of 16%.
GlobalFoundries chips are found inside smartphones, laptops, automobiles, VR systems, video game consoles, smart speakers, and are also used in artificial intelligence and 5G
Global Foundries has customers such as Ford, Qualcomm, MediaTek, and Qorvo
and on March 7th GlobalFoundries announced it is delivering Next-Gen Silicon Photonics Solutions collaborating with industry leaders including Broadcom, Cisco Systems, Inc, Marvell and NVIDIA, along with breakthrough photonic leaders including Ayar Labs, Lightmatter, PsiQuantum, Ranovus and Xanadu, to deliver innovative, unique, feature-rich solutions to solve some of the biggest challenges facing data centers today.
As of today $GFS is trading at 62.18 and I believe in the next 6-12 months with the explosion of electric vehicles and sustained/increased demand with the expansion of fabs and projected revenue increases we will see a price estimate of $80 on average with a high of $100.
I’m not a financial advisor this is not financial advice do your own dd I am open to discussion.
GlobalFoundries says revenue growth to accelerate amid fab expansions
GlobalFoundries Announces Next-Gen Silicon Photonics Solutions
More Compute Power, Better Connectivity
Submitted April 04, 2022 at 07:14PM by GravyCancel
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