Tower Semiconductor: A Promising Buy Amid Market Turmoil

The recent announcement from Chinese AI lab DeepSeek regarding its new advanced language model sent ripples through the market, leading analysts like Cody Acree from Benchmark to view Tower Semiconductor Inc. (NASDAQ: TSEM) as a potentially attractive buying opportunity.

Market Reaction to DeepSeek's Launch: On Monday, the stock market faced a selloff, largely attributed to DeepSeek's claims that its large language model performs comparably or even outperforms existing models, while being significantly more affordable. These assertions, despite some skepticism among experts, raised questions about the future viability of high-capex AI business models.

Acree pointed out that concerns over valuation and capital expenditures are growing within the AI sector, driven by DeepSeek’s competitive pricing for token generation and its status in the top 10 for performance. Despite the tumult, Acree noted that the substantial drop in stock prices presents a unique chance to invest in undervalued stocks with strong earnings potential. Among these, he highlighted Tower Semiconductor, maintaining a “Buy” rating with a target price of $60.

Acree underscored Tower Semiconductor's robust position and future growth, particularly due to its leadership in technologies crucial for RF infrastructure, including the Silicon Germanium (SiGe) processes for electrical amplifiers and optical transceivers that are essential to AI data centers. He pointed out that Tower holds the top market share in SiGe-based optical transceivers and leads the industry in Silicon Photonics foundry services.

In addition to its existing products, Acree mentioned that Tower Semiconductor is advancing in technologies like active copper cables and pluggable optical modules. These innovations place the company favorably to leverage ongoing developments in AI infrastructure.

Current Market Performance: As of the latest information, shares of Tower Semiconductor were up by 1.25%, trading at $46.07, indicating a potential recovery in investor sentiment.

semiconductor, investment, AI