Benchmark raised its price target on Tower Semiconductor (NASDAQ:TSEM) to $165.00 from $150.00 and kept a Buy rating on the specialty foundry. The new target sits at the top of the analyst range, which spans from $114 to $165, and follows a quarter in which the company posted revenue and earnings that modestly surpassed consensus estimates.
Quarterly performance
Tower reported fourth-quarter revenue of $440 million, representing 14% growth year-over-year and 11% sequential growth, a performance described as slightly above consensus. Adjusted earnings came in at $0.78 per share, beating analyst expectations by $0.10. For the full year, the company recorded $1.57 billion in revenue with a reported gross profit margin of 23.23%, according to InvestingPro data.
Drivers of growth
The company attributed much of its expansion to strength in its RF Infrastructure segment focused on AI data center demand, with particular emphasis on its silicon photonics business. Tower is said to hold roughly an 85% market share in silicon photonics, a position that the firm and analysts point to as a key contributor to both revenue and margin improvement. Fourth-quarter gross margin rose by 320 basis points sequentially and 430 basis points year-over-year.
Balance sheet and market position
With a market capitalization now exceeding $14.6 billion, Tower operates with modest leverage; its debt-to-equity ratio stands at just 0.06. InvestingPro data shows the stock has returned about 195% over the past year, though those same Fair Value estimates indicate the shares may be trading above intrinsic value.
Guidance and outlook
For the first quarter of fiscal 2026, Tower guided revenue of $412 million, which is above the consensus estimate of $408 million. The company characterized that quarter as the seasonal trough for the year and projected sequential revenue and profit growth through fiscal 2026. Analysts are modeling significant earnings growth for the year, with consensus EPS of $2.94 for fiscal 2026 versus reported diluted EPS of $1.94 for the last twelve months.
Analyst view on margins and product mix
Benchmark highlighted the firm’s higher incremental margins and expects these to average above the approximately 55% incremental margin reported in the fourth quarter, pointing to the higher-margin optical infrastructure product mix as a supporting factor. InvestingPro additionally lists 13 investment observations for TSEM, including items on liquidity, debt metrics, and long-term performance measures intended to help investors evaluate the company.
Context from recent company statements
In related disclosures, Tower Semiconductor reported record revenue for the fourth quarter of 2025, exceeding analyst expectations. The company linked the strong outturn to its silicon photonics operations and improved profitability, with results described as evidence of robust operational execution within a competitive market. Analysts had expected strong results, but the actual performance exceeded those projections. Company commentary and the reported numbers together indicate the firm is leveraging its specialty foundry capabilities effectively, and investors are watching the firm’s ongoing expansion in silicon photonics closely.
What this means for investors
Benchmark’s move to set a $165 price target reflects confidence in Tower’s growth trajectory tied to silicon photonics and optical infrastructure, as well as the potential for above-average incremental margins. At the same time, InvestingPro signals that the stock’s strong recent run—about a 195% return over the past year—means market pricing may be above current Fair Value assessments, which is a relevant consideration for valuation-focused investors.
Note: Financial figures, analyst projections, and market statistics in this report are taken from company disclosures, Benchmark’s note, and InvestingPro data as provided in the disclosures reviewed.