Here's Why Tower Semiconductor Stock Is Rocketing Higher Today

Tower Semiconductor (TSEM) surged 10.85% after Bank of America initiated coverage with a buy rating and a $367 price target, implying 63% upside from current levels. The firm spotlighted Tower's market-leading position in silicon photonics for AI data centers, projecting the company's SiPho revenue will double in 2026.

The rally follows strong second-quarter 2026 results: Tower reported record revenue of $460 million, up 24% year-over-year, and net income of $91 million, up 95% from the prior year. BofA's bullish stance centers on Tower's exposure to the AI infrastructure buildout, where silicon photonics enables faster data transmission in hyperscale environments.

The gains come with a valuation caveat. Tower now trades at 88.8x trailing earnings, a stark premium to its five-year average of 17.3x. The multiple expansion reflects investor enthusiasm for AI-adjacent plays, but it also raises the bar for execution and leaves less room for disappointment.