In the beginning of August, Israeli chipmaker Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE:TSEM) reported sturdy monetary outcomes for the second quarter of 2025, which led to a double-digit achieve within the share worth. Within the following days most of those rises have been worn out however since mid-August the inventory has been hovering on excessive buying and selling volumes.
The end result has been a forty five% rise within the share worth in lower than a month. The chip firm from Migdal Ha’emek now has a market cap of $7.566 billion. On the best way it has surpassed the value at which it was alleged to have been bought to Intel in a deal that was canceled in 2023 after regulatory approval was not obtained in China. In hindsight it appears as if Tower could be glad with that cancelation, following the issues affecting Intel, which has changed its administration and is implementing a streamlining and reorganizational course of together with main cuts.
In early 2022, Intel introduced that it was buying Tower for $5.4 billion ($53 per share) at a 60% premium on the share worth on the time. A number of months after the cancelation, Tower’s share worth slumped to simply $22 however has since soared to $67.65 at shut of commerce on Wall Road yesterday – 27% above the value of the Intel deal.
Benefiting from the Chinese language restrictions
What explains the surge in current weeks, and does the inventory nonetheless have additional to rise? Oppenheimer Israel senior analyst Sergey Vastchenok, factors to a number of components. “To start with, there may be presently an ongoing optimistic sentiment in the direction of the chip market, and we noticed proof of this within the final reporting season,” he says. “Tower inventory, till just lately, lagged a bit, and we’ve just lately seen a pattern through which buyers are on the lookout for publicity to AI via corporations that haven’t but attracted curiosity and haven’t been rising. Tower was a super-cheap firm and even now, after the will increase, it’s buying and selling at an EBITDA a number of of near 10, in contrast with 20-plus and 30 for different shares within the business, so it’s nonetheless one of many most cost-effective amongst chip shares. The market has paid much less consideration to it, it has gone underneath the radar.”
The optimistic sentiment within the business is influenced, amongst different issues, by the strikes of US President Trump, particularly in the direction of China. In accordance with Vastchenok, “Trump is making an attempt to limit exercise, and other people perceive that there’s a lack of chip manufacturing capability outdoors of China. Tower is among the corporations that has superior factories within the US and is increasing them.”
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“Starting to get credit score”
With publication of the second-quarter studies, Tower CEO Russell Ellwanger mentioned the corporate is strengthening its positioning as a key producer for the next-generation high-performance communications ecosystem. That is primarily because of the enlargement within the information middle and AI market. And Vastchenok notes that Tower’s AI exercise is already approaching 30% of its gross sales combine. He explains that in information facilities there may be significance and a whole lot of funding in optical communications, and Tower produces a chip for a selected element in it. It additionally operates within the RF area associated to the cell market, the place after a number of tough years there may be progress.
Oppenheimer’s suggestion for Tower shares is “outperform” with a worth goal of $70, which is 4% above its present worth. The value goal worth has been raised from $60 following the newest studies.
This week US funding home Benchmark additionally raised the value goal for Tower inventory from $66 to $73, and stored a “Purchase” suggestion. Benchmark famous that following a gathering with Tower’s administration, it maintains its confidence and optimistic outlook, and likewise positively famous the corporate’s steps to broaden its manufacturing capability. In accordance with information from “The Wall Road Journal” and the TipRanks web site, there are 5 analysts that cowl Tower and all of them are optimistic, with a mean worth goal increased than $70.
All it is a far cry from the scenario 20 years in the past when Tower was mired in debt. Ellwanger, who joined the corporate in 2005 throughout that disaster, was among the many few who believed in its future, and has led the main change within the firm’s fortunes.
After the cancellation of the sale, which pressured Intel to pay compensation of $353 million to Tower, Ellwanger mentioned: “I am not saying it is good that the deal did not occur, nevertheless it wasn’t a giant slap within the face.”
“If the deal had gone via, Tower’s scenario at the moment would in all probability be much less vivid,” estimates Vastchenuk. “With what’s occurring at Intel and the cuts of what is not on the core of the enterprise, and Tower wasn’t on the core.” The analyst nonetheless believes that Tower is undervalued and “is beginning to get a few of the credit score it deserves. It is coming finally.”
Printed by Globes, Israel enterprise information – en.globes.co.il – on September 11, 2025.
© Copyright of Globes Writer Itonut (1983) Ltd., 2025.
