Despite Macro Headwinds, GlobalFoundries Achieves Solid Q3 Results; No Change to $45 FVE

GlobalFoundries reported third-quarter results slightly ahead of management’s guidance and our expectations. We like that 38% of the firm’s customers are under long-term agreements, with a total value over $27 billion, which offers visibility into future revenue growth and increases customer switching costs. Management expects macroeconomic and geopolitical uncertainty to negatively impact the firm’s sales in the first half of 2023. We suspect the negative impact could last longer, though we still expect GlobalFoundries to grow its top line in 2023 thanks to new design-wins and improved wafer pricing. We are maintaining our $45 fair value estimate, and we think shares of no-moat GlobalFoundries look overvalued, as we believe current market prices imply stronger growth than our expectations.