Tower Semiconductor Ltd (NASDAQ:TSEM), a leading foundry of high-value analog semiconductor solutions, stock rose 0.53% (As on November 11, 11:21:03 AM UTC-4, Source: Google Finance) after the company reported third-quarter results that beat analyst expectations and provided record fourth-quarter revenue guidance that exceeded consensus estimates. Tower’s net profit for the quarter was $54 million, compared to $47 million in the second quarter. The company generated strong operating cash flow of $139 million while investing $103 million in property and equipment. In the second quarter of 2025, cash flow generated from operating activities was $123 million and investments in property and equipment, net, were $111 million. To support growth in its SiPho and SiGe business, Tower announced an additional $300 million investment for capacity expansion and next-generation capabilities. The additional investment includes Fab3 capacity expansion, whilst maintaining the fab at full utilization. The company is also extending its Newport Beach site lease, enabling up to an additional 3.5 years from the previous 2027 term, at an average of $24 million per year over the five-year period.

Moreover, TSEM and Xscape Photonics, a U.S.-based innovator in advanced photonic interconnects funded by industry leaders such as NVIDIA and Cisco, today announced the successful prototyping and validation kit availability of the industry’s first on-chip, optically pumped, multi-wavelength laser source. Built on Tower’s mature, high-volume PH18 Silicon Photonics platform, the solution supports CWDM and DWDM wavelength grids and is tailored for AI datacenter fabrics, where bandwidth density, power efficiency, and scalability are essential. The optical interconnect market for AI datacenters is expected to grow, driven by the rising demand for high-speed, low-latency connectivity in hyperscale AI deployments. According to LightCounting, sales of optical transceivers and LPO/CPO for AI clusters are expected to reach more than $10 billion in 2026, double the size of sales in 2024. LightCounting projects these sales to reach $20 billion by 2030.

TSEM in the third quarter of FY25 has reported the adjusted earnings per share of 55 cents, beating the analysts’ estimates for the adjusted earnings per share of 54 cents. The company had reported the adjusted revenue growth of 6 percent to $395.7 million in the third quarter of FY25, beating the analysts’ estimates for revenue of $394.97 million. Gross profit for the third quarter of 2025 was $93 million, compared to $80 million in the second quarter of 2025.

Tower’s stock surged following its forecast of record fourth-quarter revenue of $440 million (±5%), well above analyst expectations of $434 million. This guidance represents a 14% YoY and 11% sequential increase.