Daniel Rochlitz @Danielovic135: "$TSEM +470% in Less..."

Slovakia

$TSEM (Tower Semiconductor Ltd) +470% in Less Than a Year. And I Added More After Today’s Pullback. When I first bought $TSEM it wasn’t an AI hype trade. It wasn’t about GPUs. It wasn’t another “AI stock” story. It was a bet on a piece of technology infrastructure that most of the market was overlooking. Today, my position is up approximately 470% in less than a year. And after today’s pullback, I increased it again. Why? Because in my view, the market still doesn’t fully appreciate what is happening at Tower Semiconductor. Q1 2026 wasn’t just a strong quarter. It was confirmation that the company is entering a new phase of growth. Tower reported: • Revenue of $414 million (+15% YoY) • Net profit of $65 million (+62% YoY) • Gross profit of $111 million (+52% YoY) • Operating profit of $65 million (+96% YoY) • Adjusted EPS of $0.65 versus expectations of approximately $0.55 Even more important was what came alongside those results. The company announced $1.3 billion of contracted silicon photonics revenue for 2027 from major customers and received approximately $290 million in capacity reservation prepayments. These are no longer investor presentations or future promises. These are customer commitments backed by real money. Why Silicon Photonics Matters Many investors continue to focus primarily on $NVDA (NVIDIA Corporation) , $AMD (Advanced Micro Devices Inc) or $AVGO (Broadcom Inc) However, as AI clusters become larger and more powerful, data movement between servers and accelerators becomes an increasingly critical challenge. This is where silicon photonics comes in. Instead of relying solely on traditional electrical interconnects, data can be transmitted optically, enabling higher bandwidth, lower power consumption, and reduced signal loss. Without this layer of technology, scaling future AI infrastructure becomes significantly more difficult. Tower is now one of the most important specialized foundry partners in the silicon photonics ecosystem. The Outlook Is What Matters Most Management expects: • Q2 2026 revenue of approximately $455 million • Around 22% year-over-year growth • The highest quarterly revenue in company history • Continued revenue and margin expansion throughout 2026 CEO Russell Ellwanger also reiterated the company’s long-term targets: • $2.8 billion in revenue by 2028 • $750 million in net profit by 2028 If these targets are achieved, the company could look dramatically different in a few years than the market values it today. Why I Added More After the Pullback It wasn’t about the stock price. It was about the fundamentals. What I see is: • Record backlog levels • Expanding margins • Customer prepayments securing future capacity • Expansion of 300mm manufacturing capabilities in Japan • Customer commitments extending into 2027 and 2028 • Increasing importance of AI infrastructure beyond GPUs themselves The market often focuses on the next quarter. I prefer looking two to three years ahead. Risks Of course, risks exist. After rising several hundred percent, TSEM is no longer a cheap semiconductor stock. A slowdown in AI capital spending, delays in data center construction, execution issues during capacity expansion, or lower utilization of new facilities could all pressure valuation. These risks should not be ignored. My Conclusion For me, TSEM is no longer just a traditional semiconductor foundry. I view it as an AI infrastructure company hidden inside a specialized manufacturing business. While much of the market focuses on how many GPUs NVIDIA will sell next quarter, Tower is helping enable the technologies that allow data to move efficiently across the AI ecosystem. That is why I added to my position after today’s decline. Not because the stock went down. But because, in my opinion, the underlying business is improving faster than the market currently recognizes.

Not investment advice. The author may have financial interests in the mentioned instruments.