Tower Semiconductor's stock advanced sharply on Friday, closing 7.7% higher at $139.04 after reaching an intraday peak of $141. The rally extended into after-hours trading, with shares adding another 1% to $140.50.
AI Partnership Drives Momentum
The surge followed the company's announcement of a collaboration with Nvidia to develop silicon photonics technology for artificial intelligence data centers. The partnership targets production of 1.6-terabit optical modules designed for Nvidia's networking infrastructure, addressing what Nvidia's networking head Gilad Shainer called "the exponential growth of AI" driving demand for faster networks.
Silicon photonics technology uses light instead of electricity to transmit data, offering potential advantages in speed, power efficiency, and thermal management. Tower CEO Russell Ellwanger emphasized the company's focus on delivering "advanced, high-speed technologies" for data-center and AI applications.
Earnings Focus on Execution
With Tower scheduled to report fourth-quarter and full-year 2025 results on February 11, investor attention has shifted to whether the photonics initiative will translate into meaningful revenue. The company has not disclosed financial terms or a shipment timeline for the Nvidia-related project.
Analysts note that while partnerships with major technology firms generate excitement, the real test comes when development projects transition to volume production. Tower's earnings call, scheduled for 10:00 a.m. Eastern on February 11, will likely focus on the photonics business timeline, margin implications, and demand trends for the company's specialty semiconductor processes.
The chip foundry has historically focused on analog and mixed-signal technologies rather than cutting-edge logic chips, an approach that aligns with photonics manufacturing where reliability and yield often outweigh transistor density. However, the sector faces challenges including lengthy qualification processes and potential demand volatility.
Friday's rally occurred alongside broader strength in semiconductor stocks, with Nvidia leading gains as the Dow Jones Industrial Average surpassed 50,000 for the first time. Market analysts attribute the momentum to sustained investment in AI infrastructure by major technology companies.
