Barclays Sees 41% Upside In TSEM Stock As It Initiates Coverage — Says Firm's ‘Well Placed,’ Offers Agnostic Exposure

• Barclays initiated coverage of Tower Semiconductor with an ‘Overweight’ rating and set a $310 price target.
• The firm called Tower Semiconductor a leading silicon photonics foundry and a “key facilitator” of optical growth.
• Tower Semiconductor has secured $1.3 billion in silicon photonics customer contracts for 2027 revenue.

Tower Semiconductor (TSEM) drew a bullish initiation from Barclays, which initiated coverage on the stock with an ‘Overweight’ rating and $310 price target, according to TheFly.

The firm called Tower Semiconductor a leading silicon photonics foundry and said optical is set to become one of the fastest-growing semiconductor end markets, with Tower acting as a “key facilitator.”

Barclays acknowledged competition but said Tower Semiconductor remains “well placed and offers agnostic exposure,” per TheFly. The firm’s $310 target for TSEM stock implies more than 41% upside from the previous close.

TSEM’s Silicon Photonics Business Accelerates

Tower Semiconductor’s silicon photonics (SiPho) business reached a $680 million annualized revenue run rate (ARR) in the second quarter (Q2) of 2026, up from $180 million a year earlier.

"We plan to cross the $1 billion of SiPho revenue annual run rate in the fourth quarter of 2026, with continued significant growth throughout 2027," said CEO Russell Ellwanger.

Tower reported record Q2 revenue of $460 million, up 24% year over year, and guided third-quarter (Q3) revenue to $520 million, a record for the company. Its adjusted earnings per share (EPS) came in at $0.88, beating the consensus estimate tracked by FiscalAI.

Tower Customers Commit $1.3B For 2027

The company has secured $1.3 billion in silicon photonics customer contracts for 2027 revenue, along with $290 million in customer prepayments for capacity reservations. Its 2028 contractual wafer commitments are even larger, with additional associated prepayments due by January 2027.

Tower has also been adding capacity to meet that demand. In July, the company announced an expansion of its 300mm silicon photonics, silicon germanium, and advanced packaging capabilities in Japan, with support from the Japanese government.

Tower and NewPhotonics also announced this week that they had begun high-volume shipments of optical engines for AI interconnects, targeting applications spanning 800G to 1.6T connectivity.

Retail Sentiment Around TSEM Stock

Retail sentiment around TSEM jumped to ‘extremely bullish’ territory on Stocktwits, up from ‘bearish’ reading a month ago.

So far this year, Tower Semiconductor shares have surged more than 80%. In comparison, the Invesco NASDAQ Next Gen 100 ETF (QQQJ) and iShares AI Innovation and Tech Active ETF (BAI), which hold TSEM stock, have risen by around 19% and 31%, respectively, during this period.

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