u/daxter_101 ·
Reddit — r/ValueInvesting
· March 22, 2026 at 00:40
· ⬆ 16 pts
· 💬 7 comments
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AI Summary
Summary
The author argues that Tower Semiconductor (TSEM) is a highly undervalued play in the AI photonics space, possessing the only production Silicon Photonics (SiPho) PDK.
The core thesis relies on a low tradable float (~35M shares) combined with high growth (70% YoY in SiPho) and upcoming catalysts (Q1 earnings, NVIDIA partnership) that will trigger a massive upward re-rate.
Quality assessment: Speculative DD. While it includes specific data points regarding float, market cap, and growth rates, the "5-10x potential" and "violent re-rate" language leans heavily into momentum/squeeze speculation rather than traditional value investing.
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Tsem owns the only production SiPho PDK on earth. LITE, COHR, AAOI, Broadcom, Marvell — they all come to Tower to fab their photonics chips because literally no one else can make them.
LITE (the customer): $55B market cap.
TSEM (the foundry everyone depends on): $19B.
The float is the real play. 112M shares on $19B. Dual-listed with 25% locked in foreign pensions that never sell on US drawdowns. Real tradable float: \~35M shares.
Friday proof: sector down 8-14%. TSEM down 1.48% on 3x volume. The structural floor is real.
Now flip it. Q1 earnings in may. SiPho growing 70% YoY. NVIDIA partnership. $650M to triple capacity. Near zero analyst coverage.
When buying hits 35M tradable shares with no supply, the re-rate is violent.
Not financial advice. Float math doesn’t lie.
TSEM owns the only production SiPho PDK, serving major tech clients, and has a highly restricted tradable float of roughly 35M shares. The combination of 70% YoY SiPho growth, a new NVIDIA partnership, and near-zero analyst coverage means any buying pressure will hit a severely limited supply of shares. Go long on TSEM ahead of May Q1 earnings to capture a violent upward re-rate driven by float dynamics and AI photonics demand. The float calculation may be inaccurate, institutional lock-ups could expire, or the broader semiconductor sector could drag the stock down despite its perceived "structural floor."