Wedbush downgrades GlobalFoundries: Sees 'more elongated' industry downturn

Investing.com -- Wedbush downgraded GlobalFoundries to Neutral from Outperform in a note on Wednesday, warning that the chipmaker is facing an industry down cycle “more elongated than anticipated” and lowering its price target to $40 from $42.

Analyst Matt Bryson said Wedbush still believes GlobalFoundries has “a path to a better future model” driven by improved end-market fundamentals and stronger local supply chains, but recent data suggests those catalysts are further away.

Wedbush highlighted “near-term risk to CE device builds and particularly handset units,” citing higher costs tied to rising memory prices that are already prompting original equipment manufacturers to reduce production.

Bryson also pointed to weakness beyond consumer electronics. “Our recent checks in Taiwan suggested that industrial/auto demand remains relatively weak with no anticipation of any near-term recovery,” he wrote.

With around half of GlobalFoundries’ revenue linked to smart mobile devices and IoT categories, Wedbush believes the backdrop “limits near-term upside” and could create risks for its 2026 sales outlook.

While the firm still views the company’s U.S. and European footprint as a strategic advantage, it stated that political momentum for domestic chip incentives has waned.

Wedbush noted that recently published federal guidance showed China semiconductor tariffs won’t take effect until June 2027, adding that more aggressive Section 232 measures now appear “a less probable near-term outcome.”

Bryson added that GlobalFoundries should still deliver margins “close to historically high” this quarter despite lower utilization, but added that a meaningful lift from edge AI adoption is “more likely 12+ months out.”

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