Tower Semiconductor Ltd. (TSEM) Signals Strong AI Growth Momentum

Tower Semiconductor Ltd. (NASDAQ:TSEM) is one of the most buzzing AI semiconductor stocks to buy in 2026. On May 14, analysts at Benchmark reiterated a Buy rating on Tower Semiconductor Ltd. (NASDAQ:TSEM) and raised the price target to $335 from $230.Tower Semiconductor Ltd. (TSEM) Signals Strong AI Growth Momentum

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The bullish stance and price target hike come on the heels of Tower Semiconductor indicating that contractual commitments for 2028 are significantly higher. In addition, the company holds $1.3 billion in contracted fiscal 2027 silicon photonics revenue, backed by $290 million in customer payments.

According to Benchmark, Tower Semiconductor’s long-term outlook is intact, given the combination of hard customer commitment and pre-funded capacity reservations. In addition, the $1.3 billion contracted for 2027 reflects only the contractual base level, not the full silicon revenue forecast.

The contracts for 2028 signal even higher capacity reservations with additional prepayments expected. Additionally, the optical business is expected to be a core driver of the company’s overall model.

Tower Semiconductor Ltd. (NASDAQ:TSEM) is a specialty foundry that manufactures analog and mixed-signal semiconductor chips for over 300 customers globally. Rather than designing chips for their own brand, they take proprietary designs from “fabless” companies and build the physical wafers used in smartphones, cars, medical devices, and aerospace systems.

While we acknowledge the potential of TSEM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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