The 51% net income decline on modest revenue growth is a clear earnings miss vs. the prior year, but the 520bps gross margin expansion and strong operating cash flow signal improving operational efficiency. Watch for Q2 guidance on the upcoming earnings call — the margin trajectory is the key positive offsetting the tax-driven EPS collapse.
Price Chart
Executive Summary
GLOBALFOUNDRIES reported Q1 2026 results: revenue grew 3.1% YoY to $1.634B, but net income plunged 51% to $104M from $211M, driven by an $81M income tax expense vs. a $16M benefit last year. Gross margin expanded 520bps to 27.6%, and operating cash flow surged to $542M. The company also repurchased $400M in shares during the quarter.
Key Facts
- Q1 2026 net revenue $1.634B, up 3.1% YoY from $1.585B
- Net income $104M, down 50.7% from $211M YoY
- Diluted EPS $0.18 vs $0.38 YoY
- Gross margin 27.6%, up 520bps from 22.4% YoY
- Operating cash flow $542M, up 63.7% from $331M YoY
- Income tax expense of $81M vs $16M benefit YoY
- Repurchased $400M in shares during Q1, including $300M from majority shareholder Mubadala
- $100M remaining under $500M buyback authorization
- Acquisition of Synopsys ARC Processor IP Solutions expected to close H1 2026
Financial Impact
Net income halved to $104M despite 3.1% revenue growth, driven by $97M swing in income tax expense. Gross margin improvement of 520bps is a positive structural signal.
Risk Factors
- Effective tax rate surged to 43.8% from (8.2)% due to German deferred tax asset adjustments
- SG&A expenses rose 80.5% YoY, driven by acquisition-related costs and lower tool sale gains
- Home and Industrial IoT revenue declined 22.3% YoY; Smart Mobile Devices down 4.8%
- Inventory write-downs increased to $61M from $16M YoY
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 5 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 6-K Filing (Primary) | 0001709048-26-000112 |
| Document: gfs-20260331_d2.htm | 0001709048-26-000112 |
| Document: 0001709048-26-000112-index-headers.html | 0001709048-26-000112 |
| Document: 0001709048-26-000112-index.html | 0001709048-26-000112 |
| Document: 0001709048-26-000112.txt | 0001709048-26-000112 |
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