10 Best QQQ Stocks to Buy According to Analysts

5. Globalfoundries Inc. (NASDAQ:GFS)

Average Upside Potential: 34.64%

Number of Hedge Fund Holders: 21

Globalfoundries Inc. (NASDAQ:GFS) is a semiconductor contract manufacturing and design company that specializes in producing integrated circuits (ICs) of various technologies, including leading-edge and mature nodes. It operates manufacturing facilities around the world and serves a diverse customer base, including major chip designers and technology companies.

The acquisition of Tagore Technology’s GaN IP portfolio aligns with its strategy to address the growing demand for high-power GaN devices in sectors like automotive, IoT, and AI data centers. This technology enhances efficiency and performance in these applications. The company’s recent $1.5 billion funding through the US CHIPS and Science Act will support the domestic high-volume manufacturing of GaN chips, further strengthening the company’s position in the power semiconductor market.

Despite recording a revenue of $1.63 billion in Q2 2024, beating analyst expectations, the company saw an 11.54% revenue decline in the quarter. The decline was attributed to weak demand in key segments such as Communications Infrastructure, Data Centers, and lower-end Consumer and Home Electronics. Additionally, the company faced challenges from broader macroeconomic conditions, geopolitical instability, and elevated inventory levels in the semiconductor industry. However, there were some positive developments, such as higher average selling prices and growth in the automotive segment.

In early September, it formed a strategic partnership with Silicon Catalyst, a renowned startup incubator. This collaboration aims to foster innovation and accelerate the development of next-generation semiconductor solutions. By providing startups with access to the company’s advanced technology and expertise, the partnership will empower them to create cutting-edge chips for applications like AI, automotive, and IoT.

Despite challenges, Globalfoundries Inc.’s (NASDAQ:GFS) rebound in revenue from the automotive industry and its potential for future growth in emerging technologies like AI and 5G make it a compelling investment opportunity.