Tower Semiconductor: Silicon Photonics Inflection, Buy The Drawdown

Miletus Research 1.18K Followers Follow Summary Tower Semiconductor is rapidly transforming into a silicon photonics leader, now driving nearly half its revenue from AI optical content. Q2 2026 delivered record revenue of $460M, with 55% incremental operating leverage and a robust shift toward higher-margin 300mm SiPho and SiGe wafers. Management raised the 2028 model to $3.6B in revenue and $1.2B in net profit, underpinned by strong customer prepayments and fully funded capacity expansions. We initiate a Buy rating with a $250 price target, citing superior growth, margin expansion, and a fortress balance sheet with no planned dilution. gorodenkoff/iStock via Getty Images Introduction Optical interconnect economics are redistributing value inside the semiconductor supply chain. Tower Semiconductor Ltd. ( TSEM ) is a clear beneficiary of that shift. The company is not an AI compute name and does not sell This article was written by Miletus Research 1.18K Followers Follow At Miletus Research, we specialize in analyzing technology companies, exploring the nuances of their strategies in depth. Our team of experienced researchers merges cutting-edge market analytics with strategic expertise, empowering you with actionable insights that drive informed investments. Analyst’s Disclosure: I/we have a beneficial long position in the shares of TSEM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.