Tower Semiconductor Q4 Earnings: Beats EPS Estimates, Expands AI Chip Production For 2025 Growth, Stock Falls As Outlook Disappoints The Street

Tower Semiconductor Ltd (NASDAQ: TSEM) reported a fiscal fourth-quarter revenue growth of 10% year-on-year to $387.19 million, marginally beating the analyst consensus estimate of $387.13 million.

The Israel-based contract chipmaker’s adjusted EPS of $0.59 beat the analyst consensus estimate of $0.52. The stock price declined after the print.

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Gross profit was $86.8 million, up 2.9% Y/Y. The margin declined by 157 bps to 22.4%. Operating profit of $46.4 million increased 2.8% Y/Y.

During the quarter, the company generated $101 million in operating cash flow and held $1.22 billion in cash and equivalents.

During the fourth quarter of 2024, the company discontinued the lower margin legacy of 150mm flows in Fab1, with the last Fab-outs occurring in January 2025. It transferred the forward-looking strategic flows into the Fab2 200mm factory. 

CEO Russell Ellwanger said the company brought to market highly differentiated end application-advancing platforms, and the 2025 momentum is fueled by increasing production shipments as its previously announced capacity investments progress through the final stages of customer qualifications.

“Our 2025 revenue target is year-over-year growth, with sequential quarter-over-quarter revenue growth, and an acceleration in the second half of the year,” added Ellwanger.

Outlook: Tower Semiconductor expects first-quarter revenue of $358 million, with a 5% upward or downward range versus the $357.5 million consensus.

Tower Semiconductor stock has gained 62% in the last 12 months. In January, Benchmark’s Cody Acree named the stock among the recommended oversold names following the market rout triggered by DeepSeek’s announcement of its advanced language model. The analyst flagged Tower Semiconductor’s leadership in RF infrastructure technologies, including the Silicon Germanium (SiGe) process for electrical amplifiers and optical transceivers in AI data centers. 

Also, the company’s technological advancements in active copper cables and pluggable optical modules position it well to benefit from ongoing AI infrastructure developments, Acree added.

TSEM Price Action: TSEM stock is down 4.52% at $46.44 premarket at the last check Monday. 

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