Ranking of the strongest companies on the stock exchange: The stock that jumped 14% to take first place
Fears of a renewed security escalation with Iran sent the defense giant's stock to a sharp jump, propelling it to second place in market value—effectively the first in Israeli terms. Tower also surged, but the weekend in the USA shuffled the cards.
The undisputed star of the last trading week on the stock exchange is Elbit Systems. The defense giant's stock jumped by 13.7% to a market value of 119.7 billion shekels, overtaking Teva and climbing to second place in the ranking of the largest companies on the stock exchange. In fact, this is the first place that really counts.
The company ranked above Elbit, Palo Alto, is not truly an Israeli company. While it has Israeli roots and operations in Israel, it is an American company that performed a dual listing here, and it is traded according to its performance on Wall Street, not Tel Aviv.
This week it was prominent: Palo Alto actually fell by 5.72% to a value of 822.23 billion shekels, against the backdrop of weakness in the American market. Elbit, by contrast, is Israeli in every sense of the word, with extensive international operations but management and its center of gravity in Israel, and it is now de facto the largest Israeli company on the stock exchange.
What boosted it? The fear of a renewed security escalation with Iran. While security uncertainty weighs on most of the market, for a defense company it translates into an expectation of increased demand. Let us recall that Elbit arrives at this moment with a strong tailwind: an order backlog at a record high that crossed 30 billion dollars, profit that jumped 50% in the last quarter, and new giant deals in Europe. The combination of a real growth story with a geopolitical risk premium created the sharp jump.
The second story of the week is more complex. Tower Semiconductor jumped by 12.27% to a value of 89.69 billion shekels, but at the end of the week a shock arrived: the stock plummeted by about 10% in trading in the USA.
What happened? The sentiment in the chip market turned again. Intel published reports, jumped at first, but the next day turned around and fell by about 8% as attention shifted to questions surrounding its customers and the pace of progress in AI, which dragged with it broad weakness in the sector.
In the background, Wall Street doubts the sustainability of the pace of investment in artificial intelligence, and fears that if the technology giants do not see a return on investment, they will slow down spending. Such a slowdown could in the future harm the activity of manufacturers like Tower.
It is important to put this in perspective: this is a fear that stems more from the high valuation, and not from an actual demand problem. As of now, there is no noticeable slowdown on the ground, but rather an acceleration: Tower's contracts in the field of silicon photonics continue to grow, and the company still expects a record year. The gap between the fear in the market and the actual performance is exactly what makes chip stocks so volatile.
Nova rose this week by 4.22% to 43.37 billion shekels, Phoenix added 2.57%, and Mizrahi Tefahot 1.52%. On the other side, the changes were moderate: Teva fell 1.59%, Leumi 0.92%, Hapoalim 0.14%, and Azrieli 0.19%. The banks, which led in previous weeks, rested this time.
This week illustrates how much the local market is influenced by two opposing arenas: the security geopolitics that boosts the defense companies, and the global sentiment around AI that rocks the chips. Anyone exposed to Elbit or Tower through the TA-35 index or a pension fund felt both trends this week.
