Tower is benefiting from the rapid build-out of AI infrastructure.
Management reaffirmed its target of $750 million in net profit by 2028.
Shares of Tower Semiconductor (NASDAQ: TSEM) spiked on Wednesday after the Israel-based provider of specialty foundry services issued an upbeat growth forecast.
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Tower’s revenue rose 15% year over year to $414 million in the first quarter.
The tech developer serves a range of steadily expanding end markets, including the industrial, automotive, mobile, medical, aerospace, and defense industries.
CEO Russell Ellwanger highlighted the particularly strong demand for the semiconductor manufacturer’s silicon photonics technology, which accelerates artificial intelligence (AI) workloads by using light to transmit data rather than electrical signals.
Better still, Tower’s profit margins are expanding as it scales its operations. The company’s net profit soared 62% to $65 million, or $0.57 per share, as its net margin improved to 16% from 11% in the year-ago quarter.
Tower sees revenue growing roughly 22% to $455 million in the second quarter, with continued profit margin expansion throughout the remainder of 2026.
Tower also announced photonics-related contracts representing $1.3 billion in revenue in 2027, with prepayments of $290 million.
“This reflects the strength of our offerings and our customer partners’ confidence in our ability to meet the continued growing demands of next-generation AI data center architectures,” Ellwanger said during a conference call with analysts.
Ellwanger, in turn, said Tower is on track to achieve its longer-term forecast of $2.8 billion in annual revenue and $750 million in net profit by 2028.
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