Globalfoundries 2025 Q2 Earnings Strong Earnings as Net Income Surges 47%

Globalfoundries reported fiscal Q2 2025 earnings on August 5, 2025, with results that exceeded expectations and raised guidance for key metrics. The company beat revenue and margin estimates and delivered a 47.1% year-over-year increase in net income, reflecting strong operational performance and cost discipline.

Revenue
Globalfoundries reported total revenue of $1.69 billion for Q2 2025, a 3.4% increase from $1.63 billion in the same period last year. Wafer revenue, the company's primary income stream, came in at $1.52 billion, while non-wafer revenue contributed $166 million. This distribution reflects a continued emphasis on core semiconductor production alongside diversified revenue streams.

Earnings/Net Income
Earnings per share (EPS) rose significantly to $0.41 in Q2 2025, up from $0.28 a year earlier, representing a 46.4% increase. Net income also surged by 47.1% to $228 million compared to $155 million in the prior-year period, signaling continued improvement in profitability and cost management. The strong EPS performance highlights the company’s ability to deliver value to shareholders despite challenging market conditions.

Price Action
Despite the positive earnings report, Globalfoundries' stock has faced downward pressure in the short term. Over the past trading day, the stock declined by 1.50%. The trend worsened during the most recent full trading week, with a 18.69% drop, and the stock has fallen 17.59% month-to-date, reflecting broader market concerns and investor caution.

Post Earnings Price Action Review
A strategy of purchasing Globalfoundries shares following a revenue increase quarter-over-quarter and holding for 30 days has yielded a negative return of -27.79% over the past three years. This underperformed the benchmark by the same margin. The Sharpe ratio of -0.25 indicates a poor risk-adjusted return, while the zero maximum drawdown suggests the strategy did not incur losses during market downturns, though it failed to generate meaningful gains.

CEO Commentary
Timothy Graham Breen, CEO of Globalfoundries, highlighted a strong Q2 performance, surpassing revenue, gross margin, and EPS guidance. He noted $277 million in adjusted free cash flow and expressed confidence in exceeding $1 billion in adjusted free cash flow for the full year. Breen emphasized growth in high-performance markets such as automotive, communications infrastructure, and data center, while acknowledging slower recovery in smart mobile and IoT segments due to geopolitical uncertainties. Strategic priorities include expanding the global footprint, onshoring in the U.S., and forging partnerships in China for localized manufacturing. The CEO also mentioned design wins and an upcoming acquisition of MIPS to enhance AI capabilities. He expressed optimism about long-term growth driven by secular trends in AI, edge computing, and connectivity, while managing near-term challenges like inventory normalization and ASP pressures.

Guidance
For Q3 2025, Globalfoundries expects revenue of $1.675 billion, with non-wafer revenue accounting for approximately 12%. Gross margin is projected at 25.5% and operating margin at 14.2%. Earnings per share guidance is set at $0.38. The company anticipates full-year adjusted free cash flow in excess of $1 billion, supported by $700 million in capital expenditures and government incentives. Margins are expected to expand in Q4 due to improved product mix, higher utilization, and a stronger non-wafer revenue component.

Additional News
In the weeks following the earnings release, Globalfoundries announced plans to acquire MIPS Technologies to bolster its AI capabilities and support next-generation chip design. The acquisition is expected to integrate seamlessly with GF’s existing R&D infrastructure and provide a competitive edge in the AI market. Additionally, the company unveiled a partnership with a leading Chinese semiconductor firm to expand localized manufacturing, aligning with its global expansion strategy. Lastly, Globalfoundries announced a new executive appointment in its operations division, signaling a strategic shift to accelerate manufacturing innovation and customer engagement.