Tower counts its blessings on Intel deal cancelation

Core Insights - Tower Semiconductor Ltd. reported strong financial results for Q2 2025, leading to a significant rise in share price, which has increased by 45% in less than a month, reaching a market cap of $7.566 billion [1][2]. Company Performance - The share price surged to $67.65, which is 27% above the price at which Intel was supposed to acquire Tower for $5.4 billion [3]. - Following the cancellation of the Intel deal, Tower's share price had previously dropped to $22 but has since rebounded significantly [3]. Market Sentiment - Positive sentiment towards the chip market has contributed to the stock's rise, with investors seeking exposure to AI through undervalued companies like Tower [4]. - Tower is currently trading at an EBITDA multiple of close to 10, making it one of the cheapest stocks in the chip industry compared to others trading at multiples of 20 or 30 [4]. Strategic Positioning - Tower is positioning itself as a key manufacturer for next-generation high-performance communications, particularly in the expanding data center and AI markets, with AI activities approaching 30% of its sales mix [5]. - The company is also involved in optical communications and RF fields related to the mobile market, showing signs of recovery after several challenging years [5]. Analyst Recommendations - Oppenheimer has an "outperform" rating for Tower shares with a price target raised to $70, reflecting confidence in the company's growth potential [6]. - Benchmark has also raised its price target from $66 to $73, maintaining a "Buy" recommendation after a positive meeting with Tower's management [7]. - All five analysts covering Tower have a positive outlook, with an average price target exceeding $70 [7]. Historical Context - Tower's current situation is a significant turnaround from 20 years ago when it was heavily in debt, with CEO Russell Ellwanger playing a crucial role in the company's recovery [8]. - The cancellation of the Intel deal resulted in a compensation of $353 million to Tower, which may have ultimately benefited the company by allowing it to focus on its core business [8][9].