Arete Upgrades GlobalFoundries to Neutral on Estimate Reset

Arete upgraded GlobalFoundries to Neutral from Sell with a $37 price target, citing a balanced risk/reward and more reasonable valuation multiple. The analyst sees improved fundamentals in 2026 due to share gains in silicon photonics and end market inventory stabilization, with consensus estimates reset to more realistic levels.

GlobalFoundries (GFS) has clarified that its funding under the U.S. CHIPS Act does not involve any equity stake, distancing itself from the recent government agreement with Intel. This information was shared by Chief Financial Officer John Hollister during the Deutsche Bank Technology Conference [1].

The clarification comes as the Trump administration has moved to convert Intel's CHIPS Act grants into a 10% equity stake, along with other aggressive moves such as agreements to take 15% of China-related chip revenue from Nvidia and AMD. While Intel's deal has sparked concerns about state influence over corporate decisions, GlobalFoundries emphasized that its agreement under the law is based on non-equity terms.

GlobalFoundries is using its CHIPS funding to expand fabrication capacity and invest in emerging technologies. The company recently raised its long-term investment plans to $16 billion, with $1 billion allocated to capital expenditures and another $3 billion toward R&D. Hollister stated that the current capital plan is designed to support more than a decade of growth.

Investors should monitor how these CHIPS Act agreements evolve across the semiconductor sector, especially as Trump administration policies take further hold.

Separately, Arete has upgraded GlobalFoundries to Neutral from Sell with a $37 price target. The analyst cited a balanced risk/reward and more reasonable valuation multiple. Arete sees improved fundamentals in 2026 due to share gains in silicon photonics and end market inventory stabilization, with consensus estimates reset to more realistic levels [2].

References:
[1] https://www.tradingview.com/news/gurufocus:bf08605c6094b:0-globalfoundries-says-chips-act-deal-excludes-equity-component/
[2] https://www.tradingview.com/news/gurufocus:bf08605c6094b:0-globalfoundries-says-chips-act-deal-excludes-equity-component/