Ending the week on an auspicious note, Tower Semiconductor (TSEM +10.12%) stock is jumping higher this morning. Investors are rushing to click the buy button on Tower stock after a firm revealed a strongly bullish outlook for the semiconductor stock.
As of 11:15 a.m. ET, Tower shares are up 8.9%.
Image source: Getty Images.
One firm sees Tower stock continuing to rise
Initiating coverage with a buy rating, Bank of America set a price target of $367 on Tower stock today.
NASDAQ: TSEM
Key Data Points
Based on Tower's closing price of $224.70 yesterday, the Bank of America price target implies 63% upside.
According to Thefly.com, Bank of America estimates that Tower has a "market-leading" share in manufacturing silicon photonics (SiPho) integrated circuits used with pluggable transceivers in data centers specializing in artificial intelligence (AI) computing. Moreover, Bank of America projects that SiPho revenue will double in 2026 and could grow further in 2027 and beyond.
Earlier this week, Tower announced second-quarter 2026 financial results, including record revenue of $460 million, a 24% year-over-year increase. It also reported record net income climbed 95% year-over-year to $91 million in Q2 2026 (excluding non-recurring items).
Is it too late now to pick up Tower shares?
While Bank of America recognizes significant upside in Tower stock, investors need to note that shares are currently trading at a premium to their historical valuation. Whereas the five-year average price-to-earnings ratio for Tower stock is 17.3, shares are now trading at 88.8 times trailing earnings. For those undeterred by the steep price tag, Tower's strong SiPho market share makes it worthy of further investigation. Fortunately for those who find the stock's valuation unalluring, there are plenty of other leading semiconductor stocks to consider.
