Tower Semiconductor's stock surged 20.61% intraday on Wednesday, driven by a triple catalyst of better-than-expected first-quarter earnings, strong second-quarter guidance, and the announcement of major silicon photonics contracts worth $1.3 billion.

The Israel-based chip foundry reported first-quarter revenue of $413.63 million, representing 15% year-over-year growth and beating analysts' estimates of $410.98 million. Adjusted earnings came in at $0.65 per share, significantly exceeding the $0.56 consensus estimate. The company's operating profit nearly doubled, increasing 96% year-over-year to $64.57 million.

Adding further momentum, Tower Semiconductor issued second-quarter revenue guidance of $455 million (±5%), which would be a company record and substantially above the $437.3 million analyst consensus. The company also announced it has signed silicon photonics contracts with its largest customers representing $1.3 billion in expected 2027 revenue, with $290 million in customer prepayments already received for capacity reservations. CEO Russell Ellwanger cited strong demand for silicon photonics technology driven by AI infrastructure growth and expressed confidence in achieving the company's target of $2.8 billion in annual revenue and $750 million in net profit by 2028.