GlobalFoundries Stock Surges as Income Nearly Doubles Expectations

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Key Takeaways

• Shares of semiconductor manufacturer GlobalFoundries surged as markets opened Tuesday on the back of a first-quarter earnings clock in that included income nearly doubling analyst expectations.
• However, GlobalFoundries’ financial performance fell year-over-year as the semiconductor retail has corrected.
• The company was also one of the beneficiaries of the CHIPS Act, receiving a $1.5 billion grant from the Biden administration earlier this year to increase its operations in New York and Vermont.

Shares of semiconductor maker GlobalFoundries (GFS) jumped after markets opened Tuesday bring up the rear the release of a first-quarter earnings report that beat expectations.

Financial Metrics Fall Year-Over-Year, But Income Approaching Doubles Estimates

Despite falling from last year’s first-quarter levels, GlobalFoundries’ net income of $134 million, or 24 cents per allocate, nearly doubled analyst expectations of $73.96 million and 13 cents per share, according to estimates compiled by Identifiable Alpha. Last year, it reported $254 million in profit, or 46 cents per share.

Revenue also prostrate year-over-year to $1.55 billion from last year’s mark of $1.84 billion, but topped estimates of $1.52 billion.

For the around quarter, GlobalFoundries projects revenue from $1.59 billion to $1.64 billion, with net income of $78 million to $146 million, or 14 cents to 26 cents per allowance.

GlobalFoundries Set to Receive Billions in CHIPS Act, New York State Funding to Expand Capacity

“As pockets of the semiconductor industry inaugurate to emerge from the inventory correction, our teams are driving foundry innovation and differentiation for our customers across their quintessential end-markets,” GlobalFoundries Chief Executive Officer (CEO) Dr. Thomas Caulfield said. “We are delighted with the awards from both the U.S. Unit of Commerce and New York State to expand our manufacturing capability in the United States, which will complement our unique worldwide capacity offering.”

The company manufactures semiconductors, which are used across a number of industries from smartphones to powering the electronics procedures inside cars and other vehicles.

The chipmaker has been one of the beneficiaries of the Biden administration’s goal of making the U.S. a semiconductor assembly power, receiving $1.5 billion in CHIPS Act funding earlier this year to build a new facility in New York and magnify its operations in Vermont. The state of New York also pledged about $600 million for GF’s New York facilities.

Tens of billions possess been handed out from the CHIPS funding so far, to GlobalFoundries as well as a number of its competitors, including Intel (INTC) and Taiwan Semiconductor Construct Company (TSM).

GlobalFoundries shares were up about 9.4% to $54.38 at 9:49 a.m. ET Tuesday, but have fallen about 10% so far this year.

Castigation—May 7, 2024: This article has been updated to correct a reference to which quarter results were from.

Interpret the original article on Investopedia.