We recently published a list of 10 Undervalued Semiconductor Stocks to Buy According to Analysts. In this article, we are going to take a look at where GlobalFoundries Inc. (NASDAQ:GFS) stands against other undervalued semiconductor stocks to buy according to analysts.
Global market intelligence firm IDC, in its most recent report, projected a 15% growth for the global semiconductor market in 2025, driven by the relentless rise in demand for artificial intelligence (AI) and high-performance computing (HPC). According to their analysts, this surge will be fueled by forthcoming upgrades in key application markets, notably cloud data centers. Further emphasizing the industry’s promising growth outlook, Nicolas Gaudois, head of Asia-Pacific technology research at UBS, stated in a recent CNBC interview that AI-compute will continue to underpin growth in 2025. He observed:
“The 21% growth in the semiconductor market was mostly driven by AI-compute demand while non-AI growth actually declined. In 2025, AI would remain the growth driver with 40% growth but we expect non-AI portion to also grow by 17% due to several factors such as autos and industrial markets growth improving, restocking (customers buying for their inventories) in those markets and also increase in semiconductor content in devices to support edge (on-device) AI.”
Nicolas also suggested that GPU chipmakers and foundries will remain the main beneficiaries of AI demand and will make the most money from it. With the semiconductor space ripe for further growth, we have picked 10 semiconductor stocks that are undervalued and are best placed to benefit from this growth.
Our Methodology
To identify the 10 undervalued semiconductor stocks, we carried out thorough research and used stock screeners to compile a list of U.S.-listed companies. Our criteria included a market capitalization of over $2 billion, an expected share price upside of at least 10%, and a Forward PE ratio below 30x. Ultimately, the stocks were ranked in ascending order of their upside potential. These stocks are also popular among elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician holding a complex printed circuit board with microcontrollers, showing the company’s expertise in powering devices.
GlobalFoundries Inc. (NASDAQ:GFS)
Upside Potential: 16%
Fwd. PE: 28.0
GlobalFoundries Inc. (NASDAQ:GFS) is a US-based semiconductor foundry that manufactures integrated circuits for various markets, including automotive, mobile devices, Internet of Things (IoT), data centers, and communications infrastructure. The company is advantageously positioned within the North American semiconductor ecosystem, especially given the recent escalations in chip export restrictions and the US efforts to bring production closer to home.
Before leaving office in January 2025, the Biden Administration imposed new curbs on exports to China and other countries to block China’s access to advanced technology. These restrictions over the past 5-7 years have driven supply chain diversification in the US, bringing substantial benefits to GlobalFoundries Inc. (NASDAQ:GFS).
GlobalFoundries Inc. (NASDAQ:GFS) is also making substantial investments to significantly enhance its production capacity and advance its technology development efforts within the U.S. In November 2024, the company secured $1.5 billion in government funding under the CHIPS and Science Act, contributing to its broader domestic production expansion plan, which totals $13 billion over the next decade. In mid-January 2025, GlobalFoundries Inc. (NASDAQ:GFS) announced a plan to create an advanced packaging and photonics center within its New York manufacturing facility. The overall investment is expected to be $575 million, with an additional R&D investment of $186 million over the next 10 years.
Overall, GFS ranks 8th on our list of undervalued semiconductor stocks to buy according to analysts. While we acknowledge the potential of GFS to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GFS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
