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Investing.com -- Bank of America downgraded GlobalFoundries Inc and Texas Instruments Inc to Underperform, citing limited upside from current valuations and ongoing margin and macro pressures.
GlobalFoundries was cut to Underperform with a $35 price target.
BofA said gross margin expansion remains muted, with CY25E margins essentially flat at around 25% ex-depreciation and one-time charges. Rising price competition and dual sourcing among certain smart mobile customers also limit near-term upside.
While the company is gaining share in automotive components and recently won a contract with Apple for wireless connectivity and power management chips, benefits are expected to materialize only from the second half of 2026.
BofA noted GlobalFoundries’ silicon photonics segment, leveraged to data center and AI growth, contributes less than 5% of overall sales.
Texas Instruments was downgraded to Underperform with a $190 price target, down from $208. BofA said macro headwinds, limited AI exposure, and premium valuation restrict near-term gains.
The brokerage cut FY26/27 EPS estimates by 3% to $6.05/$6.91, below consensus by 8%-13%. TXN is trading at 31x/24x CY26/27 EV/FCF versus peer Analog Devices at 24x/22x, despite lower free cash flow margins of 9% versus 35%-40% for ADI.
BofA flagged inventory pressures and potential margin risks if industrial demand fails to pick up.
Both downgrades follow BofA’s reassessment of its chip coverage cluster, with the bank highlighting that neither company currently offers near-term catalysts to materially boost earnings or share performance.