GlobalFoundries Records Strong Growth in Q2 Despite End-Market Headwinds; No Change to $45 FVE

GlobalFoundries reported second-quarter results slightly ahead of management’s guidance and our expectations, thanks to strength in nearly every segment. We like that the firm’s single-source wafer shipments grew 37% year over year, as these products have higher switching costs and average selling prices. Although GlobalFoundries has its capacity booked up for both this year and next, we are concerned with softness in smartphone and PC demand and inflationary, geopolitical, and pandemic-related headwinds. We are maintaining our $45 fair value estimate and we think shares of no-moat GlobalFoundries are overvalued.