Tower Semiconductor Analyst Sees 'Attractive' Buying Opportunity Following DeepSeek Selloff

Zinger Key Points

DeepSeek's cost-effective AI model announcement disrupted the market, raising concerns over valuation and capital expenditures.
Tower’s leadership in RF infrastructure and Silicon Photonics, crucial for AI data centers, positions it for strong revenue growth.
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Benchmark analyst Cody Acree named Tower Semiconductor Inc. TSEM among recommended oversold names following Monday’s market rout, which was triggered by DeepSeek’s announcement of its advanced language model.

Monday’s Selloff: Chinese AI lab DeepSeek unveiled a new large language model reportedly meeting or exceeding leading competitors’ performance at a fraction of the cost. The claims, though met with skepticism, may have shaken investor confidence in the sustainability of high-capex AI business models.

Acree highlighted that DeepSeek’s pricing for token generation and its top 10 performance rankings have prompted concerns about AI sector valuations. However, the analyst emphasized that Monday’s sharp decline presented opportunities in oversold stocks with stable earnings prospects, including Tower Semiconductor, on which the firm maintains a “Buy” rating on with a $60 price target.

Acree noted Tower Semiconductor’s resilience and growth potential, driven by its leadership in RF infrastructure technologies, including Silicon Germanium (SiGe) process for electrical amplifiers and optical transceivers used in AI data centers. Tower holds the top market share in SiGe-based optical transceivers and leads as the highest-volume foundry in Silicon Photonics, the analyst said.

Furthermore, Arce said the company's technological advancements in areas such as active copper cables and pluggable optical modules position it well to benefit from ongoing AI infrastructure developments.

Price Action: Tower Semiconductor shares were up 1.25% at $46.07 at the time of writing, according to Benzinga Pro.