Profit doubled: Tower beat forecasts and raised expectations for the rest of the year

The chip manufacturer from Migdal HaEmek is once again giving its investors reasons to smile. Tower Semiconductor finished the second quarter with a 24% growth in revenue to $460 million, above the $455 million forecast it provided three months ago. But Tower is not stopping there and expects an acceleration in the growth rate in the current quarter to 31%. According to this forecast, Tower will for the first time surpass the revenue threshold of half a billion dollars per quarter.

Tower's stock is strengthening by more than 3% in pre-market trading on Nasdaq, following the 6.7% jump it recorded yesterday. Alongside the growth, Tower is also improving profitability; operating profit reached a record of $90 million in the last three months, 2.3 times higher compared to the operating profit in the corresponding quarter. Net profit stood at $91 million, meaning 20% of the company's revenue reached the bottom line.

Tower has been riding the photonics trend for over a year, having correctly identified the need for a transition from infrastructures based on copper wires in data centers, which cannot keep up with the speeds required for transferring data volumes in the AI era, to optical infrastructures — photonics. These demands arose following requirements for transferring large amounts of data at higher speeds than ever before in data centers for AI applications. Until today, the main infrastructure was based on copper wires, but these are unable to withstand the new loads due to physical property limitations.

Already today, the company holds signed contracts for 2027 totaling more than a billion dollars — almost all of its revenue in 2025. About a month ago, it announced a giant $4 billion project to establish additional production lines for photonics chips in Japan, with $1 billion of that amount being a grant from the Japanese government. The expansion will be carried out in two tracks, and based on the first expansion track alone, it sharply updated its forecast for 2028, setting a sales target of $3.6 billion and a net profit of $1.2 billion in 2028. Just a few months ago, Tower set a revenue target of $2.8 billion for 2028, alongside a net profit of $750 million.

Tower CEO Russell Ellwanger said:

«Against the backdrop of strong and sustained demand in Tower's core activities, we achieved record sales and profitability in the second quarter, while continuing to establish and strengthen our position as technology leaders and expanding production capacity during 2026. In addition, we announced additional significant strategic investments to expand production capacity, as a direct response to the accelerated demand from our customers. In SiPho technology, the company presented triple-digit growth in sales compared to the second quarter of 2025, with an annual sales rate of $680 million in the second quarter of 2026 compared to an annual sales rate of $180 million in the second quarter of 2025. We expect to cross the billion-dollar threshold in annual sales rate as early as the fourth quarter and continue on a significant growth path throughout 2027.»