Tower Semiconductor Nearly Doubles Operating Profit On AI Tailwinds

Tower Semiconductor Ltd. (NASDAQ:TSEM) shares climbed Wednesday aft the Israel-based spot foundry reported stronger-than-expected first-quarter results and issued upbeat second-quarter guidance.

The institution posted first-quarter gross of $413.63 million, up 15% from a twelvemonth earlier and up of analysts' estimates of $410.98 million. Adjusted net came successful astatine 65 cents per share, topping Wall Street expectations of 56 cents per share.

Tower Semiconductor Profit Growth And Margin Expansion

Gross nett accrued 52% twelvemonth implicit twelvemonth to $110.95 million, portion gross borderline expanded to 26.8% from 20.4% a twelvemonth earlier.

Operating nett roseate 96% to $64.57 million.

Operating currency travel surged to $509.97 cardinal from $93.92 cardinal successful the prior-year quarter. Tower Semiconductor ended the 4th with $243.31 cardinal successful currency and currency equivalents arsenic of March 31, 2026.

Silicon Photonics Deals Boost Long-Term Visibility

Tower Semiconductor said it signed silicon photonics agreements expected to make $1.3 cardinal successful gross successful 2027 from its largest customers. The institution besides secured $290 cardinal successful beforehand payments tied to capableness reservations.

The institution said customers person additionally committed to a larger wafer proviso statement for 2028, with further prepayments expected by January 2027.

Tower said request continues to emergence arsenic much than 50 silicon photonics customers grow artificial intelligence, information halfway and optical connectivity applications.

View much net connected TSEM

Chief Executive Officer Russell Ellwanger said the semipermanent agreements fortify the company's presumption successful the optical connectivity market, which is benefiting from increasing AI infrastructure demand.

Ellwanger added that Tower continues expanding manufacturing capableness globally to enactment next-generation optical networking technologies. The institution is targeting $2.8 cardinal successful yearly gross and $750 cardinal successful nett net by 2028.

AI And Manufacturing Expansion Remain Key Focus

Executives said AI-driven demand, semipermanent lawsuit agreements and increasing silicon photonics accumulation stay large maturation catalysts.

Ellwanger said Tower is expanding silicon photonics manufacturing crossed facilities successful the U.S., Israel and Japan portion moving with partners including Coherent Corp. (NYSE:COHR), OpenLight, Lightwave Logic Inc. (NASDAQ:LWLG), NLM Photonics, Salience Labs, Oriole Networks and Scintil Photonics.

The CEO said silicon photonics capableness is expected to summation fivefold from fourth-quarter 2025 levels by the extremity of 2026 arsenic the institution invests successful AI connectivity technologies, optical networking and precocious packaging solutions.