GLOBALFOUNDRIES Inc. GFS is increasingly positioning silicon photonics as a major growth catalyst, particularly as artificial intelligence (“AI”) drives demand for faster and more efficient data center connectivity. During the first-quarter 2026 earnings call, management highlighted strong momentum in its optical networking business, with silicon photonics emerging as a key contributor to growth.
The company expects silicon photonics revenues to roughly double in 2026 compared with 2025, supported by rising adoption of optical interconnects in AI infrastructure. Demand is being fueled by the industry's shift toward higher-speed networking solutions, where optical technologies are replacing traditional electrical connections to handle massive data flows more efficiently. GFS also reported additional tape-outs and customer wins tied to next-generation co-packaged and near-packaged optics, strengthening its long-term outlook.
Beyond silicon photonics, GlobalFoundries is benefiting from strong demand for its silicon germanium solutions used in optical networking equipment. Management noted that the capacity for these products remains heavily booked, prompting expansion efforts to meet customer requirements.
The Communications Infrastructure & Data Center segment, which includes photonics-related products, grew 32% year over year in the first quarter and is now expected to deliver high-30% growth for full-year 2026. The company's acquisition of Advanced Micro Foundry has further strengthened its photonics capabilities and broadened customer reach.
While smartphone demand remains weak, GlobalFoundries' growing exposure to AI-driven optical networking could help diversify its revenue base and support higher-margin growth. If adoption trends continue, silicon photonics may become one of the company's most important growth engines over the next several years.
How Does GlobalFoundries Stack Up Against Key Silicon Photonics Rivals?
GlobalFoundries is not alone in targeting the fast-growing silicon photonics market. Among the closest competitors is Taiwan Semiconductor Manufacturing Company Limited TSM, which is advancing co-packaged optics solutions through its COUPE platform. Leveraging its leadership in advanced process technologies and packaging, TSM is well-positioned to serve hyperscalers and AI chip designers seeking higher-bandwidth interconnect solutions. However, GlobalFoundries differentiates itself with a specialized optical networking portfolio that combines silicon photonics, silicon germanium (SiGe), packaging, testing and manufacturing services.
Another key competitor is Intel INTC, which has spent more than a decade developing silicon photonics technologies for data center networking. Intel's expertise in optical transceivers and integrated photonics positions it to benefit from the rapid expansion of AI infrastructure.
Nevertheless, GlobalFoundries is gaining traction through new customer wins, photonics-focused acquisitions and its recently launched SCALE platform for near-packaged and co-packaged optics. Management expects silicon photonics revenues to roughly double in 2026 and exceed a $1 billion annualized run rate by the end of 2028.
GFS’ Stock Price Performance & Valuation Trend
Shares of GlobalFoundries have surged 126.5% in the past six months, outperforming the Zacks Electronics - Semiconductors’ 51.8% growth.
Price Performance
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GFS stock is currently trading at a premium to its industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 46.86, as shown in the chart below.
P/E (F12M)
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Earnings Estimate Revision of GFS
GFS’ earnings estimates for 2026 and 2027 have trended upward in the past 60 days to $1.89 and $2.62 per share, respectively. The revised estimates for 2026 and 2027 imply year-over-year growth of 9.9% and 38.6%, respectively.
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GFS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).