Why GlobalFoundries Rocketed on Friday - Semiconductor Stock Surges Against Market Odds

Silicon suddenly shines. GlobalFoundries defied sector headwinds with an explosive Friday rally that left analysts scrambling.

Chipmaker's calculated gamble pays off

While competitors stumbled, GlobalFoundries executed a perfect pivot toward high-margin specialty chips. The move positions them squarely where demand outstrips supply—smartphones, automotive systems, and defense contracts.

Wall Street's predictable surprise

Institutional investors finally noticed what industry insiders knew for months: sometimes the tortoise beats the hare. The stock's double-digit percentage gain—achieved without the usual hype cycles—proves fundamentals still matter. Occasionally.

Another quarter, another reminder that semiconductor stocks move faster than analysts can update their spreadsheets. The real question: will Monday bring profit-taking or sustained momentum?

The new "1:1" proposal on chips

In the WSJ report, the Trump administration's new proposal WOULD mandate that chip companies would have to, over time, domestically produce an equal amount of chips in the U.S. relative to the amount they import from overseas in order to avoid a 100% tariff on imported chips. If a company commits to producing a certain amount of chips in the U.S., it would earn a "credit" in an equal amount of near-term imports, in order to provide time to ramp its domestic production.

The rule hasn't been implemented, but if it were, it could mean a lot more chipmakers would be looking to U.S.-based foundries such as GlobalFoundries for more of their chipmaking needs. While GlobalFoundries only makes "specialty" lagging-edge chips, not leading-edge chips central to artificial intelligence (AI), which are largely produced in Taiwan, there is still lots of lagging-edge chipmaking that happens overseas.

Image source: Getty Images.

Is GlobalFoundries still a buy?

GlobalFoundries only grew revenue 3% last quarter, as its trailing-edge chip end markets across mobile, auto, IoT, and data centers showed mixed results. Meanwhile, the stock trades around 22 times this year's earnings estimates and 17.6 times next year's estimates. Therefore, it appears about 25% earnings growth is already priced into shares.

While GlobalFoundries may get a marginal demand bump if the new rule is implemented, the domestic manufacturer that produces leading-edge processors, otherwise known as, may be the better turnaround play on this announcement, in this investor's opinion.