Tower Semiconductor Earnings Boost Outlook

Tower Semiconductor earnings on May 13 showed stronger-than-expected revenue and profit. Management said advancing silicon-photonics customer commitments are a key driver behind a raised quarterly revenue outlook it described as a company record.

Quarterly Results, Guidance, and Silicon Photonics Contracts

Tower Semiconductor (NASDAQ/TASE: TSEM) reported first-quarter results for the period Jan. 1–Mar. 31, 2026, with revenue of $414 million, up 15.0% year over year. Gross profit rose 52.0% to $111 million, operating profit nearly doubled to $65 million, and net profit increased 62.5% to $65 million. Basic earnings per share were $0.58, with diluted EPS at $0.57. These results slightly exceeded consensus estimates, with revenue beating forecasts by about $3 million to $5 million and EPS surpassing expectations by $0.01 to $0.10.

The company set second-quarter revenue guidance at a point estimate of $455 million, plus or minus 5%. This implies 22.0% year-over-year growth and roughly 10.0% sequential growth. Management reiterated expectations for sequential quarter-over-quarter revenue and margin expansion through 2026.

Tower reported operating cash flow excluding customer prepayments of $225 million for the quarter and net capital investments of $156 million. Concurrently, S&P Maalot reaffirmed Tower’s ilAA credit rating with a positive outlook.

The company disclosed $1.3 billion in silicon photonics contracts for 2027 from its largest customers and received $290 million in customer prepayments during the quarter to reserve capacity tied to those commitments. Management expects an even larger contractual wafer commitment for 2028, with additional prepayments due by January 2027. Tower counts more than 50 active silicon-photonics customers.

Tower presented a 2028 financial model targeting $2.8 billion in annual revenue and $750 million in net profit, supported by growing customer commitments and silicon-photonics visibility. Management attributed recent momentum to rising AI data center demand. Chief Executive Russell Ellwanger said, "We delivered a strong start to 2026, with broad-based year-over-year revenue growth across our key technology platforms and continued execution with strong advancement of our strategic priorities."

Additional prepayments tied to the 2028 wafer commitments are due by January 2027, a milestone management flagged as part of the multi-year build-out.