Shares of Tower Semiconductor (NASDAQ:TSEM) surged more than 14% in premarket trading on Wednesday after the company reported stronger-than-expected first-quarter results and issued record revenue guidance for the current quarter.
The stock climbed 14.06% following the earnings announcement.
Revenue and earnings exceed expectations
Tower Semiconductor posted adjusted earnings per share of $0.65 for the first quarter, beating analyst expectations of $0.55 per share by $0.10.
Revenue increased to $413.63 million, ahead of the consensus estimate of $408.38 million and up 15% from $358 million in the first quarter of 2025.
Net profit rose to $65 million, or $0.57 per diluted share, compared with $40 million, or $0.35 per diluted share, in the same period last year.
Gross profit climbed 52% year-on-year to $111 million, while operating profit nearly doubled to $65 million from $33 million a year earlier.
Company issues record second-quarter guidance
Tower Semiconductor forecast second-quarter revenue of approximately $455 million, with a potential variance of 5% in either direction.
The midpoint of the outlook exceeded analyst expectations of $436.4 million and would represent a record quarterly revenue level for the company.
“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,” said Russell Ellwanger, chief executive officer of Tower Semiconductor.
Operating cash flow strengthens
The company generated $510 million in cash from operating activities during the quarter.
That figure included $290 million in prepayments from silicon photonics customers.
Excluding customer prepayments, operating cash flow totaled $225 million.
Capital expenditures during the quarter amounted to $156 million.
Silicon photonics supports long-term growth outlook
Tower Semiconductor said it expects sequential revenue and margin growth throughout 2026.
The outlook is supported by $1.3 billion in contracted silicon photonics revenue scheduled for 2027.
The company also reaffirmed its long-term targets of reaching $2.8 billion in annual revenue and $750 million in net profit by 2028.