Contract Chipmaker GlobalFoundries Exceeds Fourth-Quarter Goals, Guides Higher

Contract chipmaker GlobalFoundries (GFS) on Tuesday easily beat Wall Street’s targets for the fourth quarter and offered a raised outlook for the current period. GFS stock rose on the news.

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The Malta, N.Y.-based company earned an adjusted $1.44 a share on sales of $2.1 billion in the December quarter. Analysts polled by FactSet had predicted earnings of $1.33 a share on sales of $2.07 billion. On a year-over-year basis, GlobalFoundries earnings soared 700% while sales climbed 14%.

For the first quarter, GlobalFoundries predicted earning an adjusted 49 cents a share on sales of $1.83 billion. That’s based on the midpoint of its outlook. Wall Street was forecasting earnings of 46 cents a share on sales of $1.82 billion. In the year-earlier period, GlobalFoundries earned 42 cents a share on sales of $1.94 billion.

“As we look to 2023, we will continue to deepen our engagements with our customers in bringing specialty and differentiated solutions to market,” Chief Executive Thomas Caulfield said in a news release.

On Feb. 9, GlobalFoundries announced a strategic, long-term agreement with carmaker General Motors (GM). Under the deal, GlobalFoundries will manufacture semiconductors for GM’s key chip suppliers at its advanced factory in upstate New York, bringing a critical process to the U.S.

GFS Stock Hits Buy Point

In morning trades on the stock market today, GFS stock climbed 6.6% to 70.50. With the move, GFS stock passed a buy point of 69.40 out of a cup base, according to IBD MarketSmith charts.

Wedbush Securities analyst Matt Bryson reiterated his outperform rating on GFS stock with a 12-month price target of 77.

The most positive surprise from GlobalFoundries’ report was its continued profit margin expansion despite semiconductor industry challenges, Bryson said. He also noted that GlobalFoundries management tends to give conservative guidance.

GFS stock ranks ninth out of 31 stocks in IBD’s semiconductor manufacturing industry group, according to IBD Stock Checkup. GlobalFoundries has an IBD Composite Rating of 90 out of 99.

Semiconductor Stocks Moving On Earnings

Other semiconductor stocks moving on earnings news Tuesday included Lattice Semiconductor (LSCC) and SkyWater Technology (SKYT).

Late Monday, Lattice delivered a beat-and-raise report for the fourth quarter, thanks to strong automotive and industrial chip sales. Meanwhile, SkyWater topped expectations for the December quarter and gave upbeat guidance for 2023.

Lattice stock rose 5.4% to 87.15 in morning trades on Tuesday, while SkyWater soared 19.2% to 13.62.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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