GLOBALFOUNDRIES Inc. (GFS): what the price requires
At today's price, GLOBALFOUNDRIES Inc. (GFS) is priced for today's economics sustained for ~17.9 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/GFS
Headline
| Field | Value |
|---|---|
| Ticker | GFS |
| Company | GLOBALFOUNDRIES Inc. |
| Current price | $64.29/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 40.5% |
| Operating margin today | 10.9% |
| Margin expansion implied | +29.6pp |
| Must persist for | 17.9y |
| Multiple paid | 49x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 12.9% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.7 years.
Reconcile: at the x-ray's 9.3% required return this reads ~9.7 years; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| cohort percentile (of 177 peers) | 75 |
| sustained it ~10 years at this level | 15% |
| implied end-window share | 1% |
Valuation X-Ray
The price is justified by relative-multiple; asset-based/earnings-power/growth-DCF land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 4.17x | 5 | expensive |
| Earnings | 3.67x | 4 | expensive |
| Relative | 1.16x | 5 | expensive |
| Growth | 1.52x | 3 | expensive |
Families that justify the price: Relative Families that call it expensive: Asset, Earnings, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.8%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $20.57 | 3.13x | yes | FCF base $1.0B, growth 1% (input: historical growth), terminal g 0.7%, WACC 8.8%, 5yr projection |
| DCF Exit Multiple | Growth | $52.16 | 1.23x | yes | Exit EV/EBITDA: 44.0x / 46.0x / 48.0x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $39.16 | 1.64x | yes | P/E 27.45x (blended: static sector reference 22x + trailing (TTM) 40x), scenarios: 23.2x / 27.4x / 31.7x (bear / base = reference held flat / bull), EV/EBITDA 25x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $17.30 | 3.72x | yes | BV/sh $21.59, ROE (TTM) 7.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $15.41 | 4.17x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $42.40 | 1.52x | yes | Rev $6.8B, growth 1% (input: historical growth; tapered), Terminal P/S: 4.4x / 5.3x / 6.1x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $55.65 | 1.16x | yes | EPS $1.59, growth 35% (input: historical EPS growth), PEG=1.15 (Fair) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $6.62 | 9.71x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.56B × (1−27%) / WACC 8.8% → EPV (no growth) |
| Residual Income | Asset | $15.13 | 4.25x | yes | BV $21.59 + 5yr PV of (ROE (TTM) 7.4% − Kₑ 9.3%) × BV; BV grows 4.8%/yr |
| Graham Number | Asset | $27.79 | 2.31x | yes | √(22.5 × EPS $1.59 × BVPS $21.59) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $21.21 | 3.03x | yes | EBITDA $0.80B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $17.89 | 3.59x | yes | FCF $1009.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $51.30 | 1.25x | yes | EPS $1.59 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $3.51 | 18.32x | yes | BV $21.59 × (ROIC 1.4% / WACC 8.8%) |
| P/Sales Sector | Relative | $61.18 | 1.05x | yes | Revenue $6.79B × sector P/S 5.0x |
| PEG Fair Value | Relative | $59.62 | 1.08x | yes | EPS $1.59 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $17.19 | 3.74x | yes | EPS $1.59 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $658.0m |
| Net debt / NOPAT (after-tax) | -1.24x (net cash) |
| Net debt / operating income (pre-tax) | -0.91x (net cash) |
| Share count CAGR (dilution) | 2.6% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
At $85.87 every valuation family lands below the price. The standard models price a 11.7% operating margin and the assets behind it, but the market is paying for something they cannot see: a multi-year capacity buildout that customers are pre-funding before it shows up in earnings.
The priced-in bet is long. Roughly 66 times operating income, implying operating growth held near the self-funding ceiling for about 22 years. That is a demanding duration even for a specialty foundry with sticky, single-sourced customers.
The near-term numbers are improving (Q1 2026 gross margin hit a record 29% and EPS beat at $0.40), and the balance sheet is net cash. The question is whether a cyclical, capital-hungry foundry can compound long enough to justify a price the static methods say is already full.
Bull Case
What the standard valuation models miss about GlobalFoundries is the difference between a commodity chip plant and a single-sourced manufacturing partner. The conventional methods read an 11.7% operating margin and a capital-heavy asset base and conclude the business is fully priced. What they cannot capture is the switching cost embedded in a foundry relationship: when an automotive or communications customer qualifies a part on GlobalFoundries' process, moving it elsewhere means re-qualifying silicon that ships into cars and infrastructure for years. That stickiness is why customers are increasing prepayments for capacity expansion, paying in advance for supply the income statement has not yet booked. The static models value the present margin; the customers are funding the future one.
The near-term trajectory backs the framing. Q1 2026 revenue reached $1.634B, up about 3% year over year and above guidance, and gross margin hit a record 29%, up roughly 510 basis points year over year. EPS of $0.40 beat the $0.35 estimate, a 14% surprise. Management pointed to a 50% rise in design wins and stronger expected growth in communications infrastructure and automotive. Automotive ran at 23% of revenue, up 24% year over year even as it dipped sequentially, with low-double-digit full-year growth guided. Q2 guidance calls for revenue near $1.76B and EPS near $0.43, a sequential step up. A foundry expanding margin while design wins accumulate is building the backlog that turns into the long-duration growth the price assumes.
The balance sheet lets the company play the long game. GlobalFoundries sits in a net cash position, roughly $658m more cash than debt, which matters in a business where capacity expansion is the growth engine and downturns are inevitable. The strategic mix has shifted deliberately toward differentiated, non-smartphone end markets, with non-smart-mobile and technology services now about two-thirds of revenue. That diversification away from the most commoditized, most cyclical demand is exactly what a specialty foundry needs to compound. Against the peer set of Diodes, ON Semiconductor, Amkor, and Vishay, GlobalFoundries is the one being repositioned as an essential, hard-to-replace supplier rather than a price-taker, and that is the bet the standard models structurally cannot price.
Bear Case
The bear case is best framed as a disagreement among the valuation methods, and the conservative ones are likely the more honest read. Every family lands below the $85.87 price (June 27, 2026). The asset-based models, the most grounded for a company whose value is fabs and equipment, land lowest: simple excess return near $17, two-stage excess return near $15, residual income near $15, ROIC-justified book value near $3. The earnings-power frames agree the price is rich (earnings-power value near $7, earnings yield near $17, FCF yield near $18). Even the peer-relative methods land in the high $40s to low $60s, still well under the quote. Only the most aggressive growth-DCF model climbs toward the price, and even it falls short. When the asset and earnings lenses, the ones best suited to a capital-intensive manufacturer, say the stock is worth a quarter to a third of its price, the burden of proof sits entirely on a growth story that has to run for two decades.
The second problem is the duration baked in. The price implies operating growth held near the self-funding ceiling for about 22 years, and history suggests only about 15% of comparable fast-growers sustain anything like that for even ten years. Foundries are cyclical and capital-hungry: capacity must be built ahead of demand, and when demand disappoints, the depreciation and idle-fab costs land on a margin that was only 11.7% to begin with. Q1 revenue, while above guidance, was down 11% sequentially, and automotive, the segment carrying the growth narrative, fell 11% quarter over quarter. The record gross margin is encouraging, but it is being celebrated precisely because the prior margins were thin. A 22-year compounding bet on a business that just printed a single-digit operating margin is a lot to underwrite.
The third issue is concentration and demand risk. The pivot toward differentiated, non-smartphone markets is strategically sound, but it means leaning harder on automotive and communications infrastructure, both of which carry their own cycles, inventory corrections, and customer concentration. Prepayments for capacity are a vote of confidence, but they are also a commitment to spend ahead of revenue, and if the design wins do not convert into volume on schedule, the company is left with expensive capacity and a still-modest margin. The net cash balance sheet provides a cushion, but it does not change the core tension: the static methods value a good, cyclical foundry at a fraction of its price, and the only way to bridge the gap is to believe in a growth durability that the company's own margin profile has not yet demonstrated.
Valuation
Start with the inversion. At $85.87 the market is paying about 66 times company-wide operating income, which at a 13.4% cost of capital implies operating growth held near the 25% self-funding ceiling for roughly 22 years. Each percentage point of assumed growth shifts that implied horizon by about three years, so the bet is both long and sensitive. The priced-in assumption reads as elevated: only about 15% of comparable fast-growers have sustained that pace for even a decade, let alone two.
The model X-ray shows unusually wide disagreement, and the disagreement is the information. Grouped into families, the methods scatter from the low teens to the low $60s, with the asset and earnings lenses pulling lowest. Asset-based models land near $3 to $17 (ROIC-justified book near $3, two-stage excess return near $15, simple excess return near $17). Earnings-power frames land near $7 to $18 (earnings-power value near $7, earnings yield near $17, FCF yield near $18). Peer-relative methods reach the high $40s to low $60s (relative valuation near $46, P/sales sector near $61). Only the growth-DCF family climbs toward the price, and the best of them, the exit-multiple frame, reaches only about $67. The blended cross-method anchor sits near $33, less than half the quote. For a capital-intensive manufacturer, the asset-based methods deserve real weight, and they are the most damning.
The balance sheet is the bright spot and does not block the bet. GlobalFoundries holds net cash of about $658m against roughly $797m of trailing operating income, so there is no solvency question and ample room to fund the capacity expansion the growth thesis requires. The recent results, a record 29% gross margin, a Q1 EPS beat, rising design wins, and customer prepayments, are real and improve the forward picture. What they do not do is convert a 22-year ceiling-rate compounding assumption into a base case. The reasonable conclusion is that the operating momentum is genuine and the entry price already assumes that momentum runs for two decades without interruption.
Catalysts
The Q1 2026 report was the most recent catalyst and a positive one. Revenue of $1.634B came in above guidance, up about 3% year over year though down 11% sequentially, gross margin reached a record 29% (up roughly 510 basis points year over year), and EPS of $0.40 beat the $0.35 estimate. Management highlighted a 50% rise in design wins and increased customer prepayments for capacity expansion. Automotive was 23% of revenue, up 24% year over year despite an 11% sequential dip, with low-double-digit full-year growth guided. (Sources: Investing.com Q1 2026 earnings transcript; The Motley Fool / Globe and Mail transcript; StockTitan 6-K summary.)
The next catalyst is Q2, guided to revenue of about $1.76B (plus or minus $25m), gross margin near 28.5%, and EPS near $0.43, a sequential improvement that would extend the margin-recovery story. The signals to watch are design-win conversion into volume, the pace of automotive and communications-infrastructure recovery, and whether prepayment-funded capacity translates into revenue on schedule. Because the price embeds a two-decade growth assumption, each quarter is essentially a referee on durability: steady margin expansion and accelerating end-market growth support the thesis, while a cyclical inventory correction in automotive or communications would expose how much of the price is forecast. (Sources: Investing.com; Yahoo Finance Q1 FY2026 transcript; public.com earnings.)
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- UMC (United Microelectronics Corporation)
- (no filing in the citation store)
- TSEM (TOWER SEMICONDUCTOR LTD.)
- (no filing in the citation store)
- AMKR (AMKOR TECHNOLOGY, INC.)
- (no filing in the citation store)
- ASX (ASE Technology Holding Co., Ltd.)
- (no filing in the citation store)
- ON (ON Semiconductor Corporation)
- (no filing in the citation store)
- DIOD (DIODES INC /DEL/)
- (no filing in the citation store)
- VSH (VISHAY INTERTECHNOLOGY INC)
- (no filing in the citation store)
- HIMX (Himax Technologies, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.