Tower Semiconductor (TSEM) Stock Forecast & Price Target

Tower Semiconductor Ltd is experiencing significant growth, particularly in its RF Infrastructure segment, which saw a 13% sequential and 60% annual increase in Q3, coupled with notable performance from its Silicon Photonics (SiPho) business expected to reach $215 million in FY25 and $300 million in FY26. The Infrastructure business recorded a remarkable 69% annual increase in FY24, with the SiPho segment contributing $105 million for the year—a 250% growth compared to the previous year—demonstrating the company's capacity to exceed targets and maintain a robust growth trajectory. Additionally, the company has seen its shares appreciate nearly 17% recently, reflecting confidence in its multi-quarter trend of strong financial results driven by expanding markets such as Data Centers and AI.

Tower Semiconductor is facing a negative outlook primarily due to the expected high-teens decline in its Mobile business through FY25, largely attributed to weakness in the Chinese Android market. Additionally, the recent extension of the Newport Beach facility lease is further straining the company's financials, resulting in an added cost of $6 million per quarter over the next five years, which adversely affects gross margins. Furthermore, projected revenues from the RF-SOI segment are anticipated to fall by approximately 21% year-over-year, indicating broader challenges in the semiconductor market that could pressure the company's pricing strategies and overall revenue.