Tower Semiconductor (NASDAQ:TSEM) Announces Earnings Results, Beats Estimates By $0.01 EPS

Key Points

• Tower Semiconductor beat earnings expectations for the quarter, reporting EPS of $0.57 versus $0.56 expected and revenue of $413.63 million, slightly above estimates.
• Management issued upbeat guidance for Q2 2026, forecasting revenue of $455 million ±5%, which would be the company’s highest quarterly revenue ever if achieved.
• Silicon photonics is driving growth, with Q1 revenue in that segment up 3x year over year and long-term customer commitments totaling $1.3 billion for 2027, supported by about $290 million in prepayments.

Tower Semiconductor (NASDAQ:TSEM - Get Free Report) posted its quarterly earnings data on Wednesday. The semiconductor company reported $0.57 earnings per share for the quarter, beating analysts' consensus estimates of $0.56 by $0.01, Zacks reports. The firm had revenue of $413.63 million for the quarter, compared to analyst estimates of $410.72 million. Tower Semiconductor had a net margin of 14.08% and a return on equity of 7.86%. Tower Semiconductor's quarterly revenue was up 15.5% on a year-over-year basis. During the same period last year, the firm posted $0.35 EPS.

Here are the key takeaways from Tower Semiconductor's conference call:

• Tower reported a strong Q1 2026, with revenue of $414 million (+15% year over year) and net profit of $65 million (+62%), while net margin expanded to 16% from 11% a year ago.
• Management guided Q2 2026 revenue to $455 million ±5%, which would be the highest quarterly revenue in company history, and reiterated its goal of sequential revenue and margin growth through 2026.
• Silicon photonics remains the key growth engine, with Q1 revenue up 3x year over year and long-term customer commitments totaling $1.3 billion for 2027, backed by about $290 million of customer prepayments.
• The company highlighted major capacity expansion and strategic moves in Japan, including its restructuring at TPSCo, full ownership of Fab 7, and plans to scale 300mm SiPho capacity to 5x the Q4 2025 level by year-end 2026.
• Gross margin improved to 27% from 20% a year ago, helped by a richer mix of newer products and pricing actions; management said the company is still working through supply constraints, especially for indium phosphide starting material.

Tower Semiconductor Price Performance

Tower Semiconductor stock traded up $50.25 during mid-day trading on Wednesday, reaching $271.08. The company had a trading volume of 5,360,183 shares, compared to its average volume of 2,605,098. Tower Semiconductor has a 1 year low of $37.48 and a 1 year high of $268.54. The company has a debt-to-equity ratio of 0.05, a current ratio of 6.48 and a quick ratio of 5.51. The company has a market capitalization of $30.48 billion, a P/E ratio of 140.46 and a beta of 0.85. The stock's 50-day simple moving average is $180.36 and its 200-day simple moving average is $138.17.

Institutional Inflows and Outflows

A number of hedge funds have recently added to or reduced their stakes in TSEM. Amundi increased its stake in shares of Tower Semiconductor by 86.8% during the 1st quarter. Amundi now owns 21,617 shares of the semiconductor company's stock worth $771,000 after purchasing an additional 10,042 shares in the last quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC increased its stake in shares of Tower Semiconductor by 4.1% during the 1st quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 99,633 shares of the semiconductor company's stock worth $3,553,000 after purchasing an additional 3,954 shares in the last quarter. Geode Capital Management LLC increased its stake in shares of Tower Semiconductor by 0.7% during the 2nd quarter. Geode Capital Management LLC now owns 95,384 shares of the semiconductor company's stock worth $4,135,000 after purchasing an additional 662 shares in the last quarter. Hsbc Holdings PLC purchased a new position in shares of Tower Semiconductor during the 2nd quarter worth approximately $438,000. Finally, Arrowstreet Capital Limited Partnership purchased a new position in shares of Tower Semiconductor during the 2nd quarter worth approximately $5,809,000. 70.51% of the stock is owned by hedge funds and other institutional investors.

Key Stories Impacting Tower Semiconductor

Here are the key news stories impacting Tower Semiconductor this week:

• Positive Sentiment: Tower Semiconductor reported better-than-expected Q1 results, with revenue up 15% year over year and EPS slightly ahead of estimates, reinforcing the company’s execution and earnings momentum.
• Positive Sentiment: The company guided Q2 revenue above consensus and said AI-related demand is driving stronger margins and a record quarterly outlook, which supports the stock’s move higher.
• Positive Sentiment: Tower announced $1.3 billion of Silicon Photonics contracts for 2027 and $290 million in prepayments, a large backlog-style commitment that improves revenue visibility and highlights strong customer confidence. Article Title
• Positive Sentiment: Management said Tower is expanding capacity to meet rising demand from AI data centers and optical connectivity applications, which investors may see as a long-term growth catalyst. Article Title

Wall Street Analysts Forecast Growth

A number of brokerages have weighed in on TSEM. Wedbush lifted their price objective on Tower Semiconductor from $125.00 to $140.00 and gave the company a "neutral" rating in a report on Thursday, February 12th. Benchmark lifted their price objective on Tower Semiconductor from $165.00 to $230.00 and gave the company a "buy" rating in a report on Thursday, March 26th. Barclays lifted their price objective on Tower Semiconductor from $114.00 to $142.00 and gave the company an "equal weight" rating in a report on Friday, February 13th. Finally, Susquehanna reaffirmed a "positive" rating and issued a $180.00 price objective on shares of Tower Semiconductor in a report on Thursday, February 12th. Two equities research analysts have rated the stock with a Buy rating and three have assigned a Hold rating to the company's stock. According to MarketBeat.com, Tower Semiconductor has a consensus rating of "Hold" and a consensus target price of $173.00.

About Tower Semiconductor

Tower Semiconductor, traded on NASDAQ under the symbol TSEM, is a specialty foundry company that provides analog and mixed-signal semiconductor manufacturing services to a broad array of customers worldwide. The company focuses on delivering tailored process technologies for high-growth markets, including radio frequency (RF), power management, imaging, automotive electronics, and Internet of Things (IoT) applications. By combining deep process know-how with flexible manufacturing capabilities, Tower Semiconductor supports the development and volume production of advanced semiconductor devices for fabless and integrated device manufacturer customers.

The company's technology portfolio spans standard and specialty processes such as CMOS, BiCMOS, high-voltage, radio frequency, silicon photonics, micro-electromechanical systems (MEMS) and image sensor production.

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