Feb 11 - GlobalFoundries on Wednesday said it expects first-quarter revenue to top Wall Street forecasts and revealed a $500 million share buyback, a move that helped push its stock more than 7% higher in premarket trading.
The company has been pivoting toward higher-growth segments of the chip market, notably products aimed at artificial intelligence infrastructure. GlobalFoundries makes specialized silicon that enables rapid data transfer between data centers, and management has emphasized those offerings as a growth driver.
In November, GlobalFoundries completed the acquisition of Advanced Micro Foundry, a Singapore-based chipmaker focused on silicon photonics - a technology that transmits information using pulses of light. GlobalFoundries said sales from its silicon photonics line more than doubled last year to exceed $200 million, and it expects that revenue stream to nearly double again in the current year.
For the first quarter, the company gave revenue guidance of $1.63 billion, plus or minus $25 million. That compares with consensus revenue estimates of $1.61 billion, according to data compiled by LSEG. On an adjusted basis, GlobalFoundries forecast earnings per share of $0.35, plus or minus $0.05, versus analysts' expectations of $0.34.
Reporting results for the fourth quarter, GlobalFoundries said revenue was $1.83 billion, topping estimates of $1.80 billion. Adjusted earnings per share for the quarter were $0.55, above the $0.47 that analysts had forecast.
Clear summary
GlobalFoundries is guiding first-quarter revenue above the street and has launched a $500 million buyback. The firm highlighted accelerating silicon photonics sales following its acquisition of Advanced Micro Foundry, and posted fourth-quarter revenue and adjusted EPS that beat analyst estimates.
Key points
- Revenue guidance for Q1: $1.63 billion, plus or minus $25 million, above consensus of $1.61 billion - impacts semiconductor and technology market expectations.
- Share buyback: $500 million repurchase program announced, a capital allocation move relevant to equity markets and investor return strategies.
- Silicon photonics growth: Revenue from the acquired Advanced Micro Foundry business more than doubled to over $200 million last year and is expected to nearly double again this year - relevant for data center interconnect and photonics sectors.
Risks and uncertainties
- Guidance ranges indicate inherent uncertainty - Q1 revenue and EPS are provided with plus-or-minus bands, leaving outcomes dependent on near-term demand and execution.
- Reliance on data center demand and specialized interconnect chips creates concentration risk for semiconductor revenue if that end market weakens.
- Projected rapid growth in silicon photonics is a forecast the company expects to realize this year, but it remains subject to market adoption and integration risks.
These developments will be watched by investors focused on semiconductor capital allocation, data center operators seeking high-speed interconnects, and analysts tracking revenue and earnings beats. The buyback and upbeat guidance combined with recent acquisition-driven revenue gains framed the market response in premarket trading.