GlobalFoundries Says AI Data Center Business Is Still in the 'Early Innings'

GlobalFoundries Inc. (NASDAQ: GFS ) stock declined Wednesday after the contract chipmaker reported better-than-expected fiscal second-quarter 2026 results, but a third-quarter outlook largely in line with Wall Street expectations failed to impress investors.

The company reported revenue of $1.79 billion, up 6% from a year earlier and above the analyst consensus estimate of $1.77 billion.

Adjusted earnings were 46 cents per share, exceeding the analyst consensus estimate of 44 cents.

GlobalFoundries Segment Performance Revenue from smart mobile devices declined 6% year over year to $644 million.

Communications infrastructure and data center revenue surged 62% to $277 million, while home and industrial IoT revenue increased 10% to $331 million.

Automotive revenue fell 10% to $333 million, while technology services revenue rose 21% to $201 million.

The company shipped 625,000 300mm wafers during the quarter, an 8% increase from a year earlier.

Margins Improve Adjusted gross margin expanded to 29.9% from 25.2% a year earlier, while adjusted operating margin increased to 16.7% from 15.3%.

Adjusted EBITDA margin declined to 32.9% from 34.7%.

As of June 30, 2026, GlobalFoundries generated $405 million in operating cash flow and held $3.3 billion in cash, equivalents, and marketable securities.

AI Infrastructure Drives Momentum Chief Executive Officer Tim Breen said the company delivered second-quarter revenue and adjusted gross margin above the high end of its guidance ranges.

Breen said GlobalFoundries continues to see strong customer demand and growth across its strategic markets, highlighting optical networking for AI data centers, where its silicon photonics and silicon-germanium technologies are gaining traction.

Expands AI And Quantum Capabilities In July, GlobalFoundries signed a letter of intent with the U.S.

Department of Commerce for a proposed $300 million award to support U.S. leadership in silicon photonics for AI infrastructure.

The company also completed the acquisition of Photeon Technologies’ integrated voltage regulator business to strengthen its power delivery capabilities for AI data centers.

In June, it acquired Synopsys’ ARC Processor IP Solutions business to expand its RISC-V intellectual property and software-to-silicon offerings.

In May, GlobalFoundries launched Quantum Technology Solutions, supported by an expected $375 million Commerce Department grant to accelerate future quantum computing hardware.

GlobalFoundries Outlook For the third quarter, GlobalFoundries expects revenue of $1.86 billion to $1.91 billion, compared with the analyst consensus estimate of $1.879 billion.

The company forecast adjusted earnings of 46 cents to 56 cents per share, compared with the analyst consensus estimate of 50 cents.

Management struck an optimistic tone on the durability of AI infrastructure demand, arguing that the opportunity remains in its early stages despite rapid growth.

Breen said the shift to optical networking in AI data centers is still in the “very early innings,” while CFO Sam Franklin raised the company’s 2026 communications infrastructure and data center growth outlook to 50%-60% from the high-30% range.

Executives also pointed to strong customer demand for silicon photonics, expanding capacity, and long-term growth opportunities in optical networking, power and quantum computing as key drivers of future expansion.

GFS Price Action: Globalfoundries shares were down 3.96% at $49.96 at the time of publication on Wednesday, according to Pro data.

Image via Shutterstock Read Also: How Intel's Earnings Turned AMD's Beat Into A Sell-Off