Short sellers nearly doubled bets against Tower Semiconductor, then the stock fell 14.5%; Nov. 2 settles it
Short interest in the AI-optics foundry jumped 68.8% to 4.57 million shares in the two weeks to September 30, 2026, before the Semtech capacity deal and a 14.5% weekly slide to $195.58. The November 2 third-quarter print decides whether the ramp or the multiple wins.
Vincent Jiang · 3 min read
The shorts moved first, the price followed
Between September 15 and 30, 2026, short interest in Tower Semiconductor−7.93% — Tower Semiconductor, down 7.93 percent today (NASDAQ: TSEM) rose 68.8%, from 2,705,350 shares to 4,567,523, about 4.1% of the shares outstanding and 1.9 days to cover 1. This week the stock repriced: down 6.8% to $195.58 on October 16 and 14.5% for the week, inside a 52-week range of $71.64 to $319.94 2. The bet was on before the news that argues against it.
A customer signed for capacity, the chief executive sold
On October 13, 2026, Tower and Semtech−7.08% — Semtech, down 7.08 percent today (NASDAQ: SMTC), an AI data-center networking chip supplier, expanded a 20-year partnership into a multi-year agreement: Semtech will invest to reserve dedicated silicon germanium capacity across Tower's fabs in the United States, Israel and Japan 3. Semtech's transimpedance amplifiers and laser drivers, the analog front ends that move bits through AI data-center links from 800G through 1.6T toward 3.2T, are built on Tower's SiGe process 34. Cignal AI, an optics research firm, projects datacom optics demand rising from $9 billion in 2024 to an estimated $37 billion in 2026 5. Against that, Russell Ellwanger, Tower's chief executive, sold 104,226 shares at $248.34 on August 11, worth $25.9 million and 16.5% of his direct stake; insiders sold $45.6 million of stock over 90 days and $60 million over the past year, with no purchases 12.
The ramp is already in the revenue line
Second-quarter revenue was $460.08 million, up 23.7% year over year, with EPS of $0.88 against a $0.76 consensus, and management called the quarter's revenue and margins company records 16. RF infrastructure, the segment carrying the optics work, was 49% of revenue, up more than 140% year over year; silicon photonics ran above a $680 million annualized pace with a $1 billion target for the fourth quarter, underwritten by about $1.3 billion of customer contracts for 2027 and $290 million of prepayments 6. Third-quarter guidance sits at a $520 million midpoint, an annualized pace above $2 billion 6.
The optics ramp is already in the revenue line, and Q3 guidance steps it up
- Revenue
- Estimate
Data
| Revenue | |
|---|---|
| Q3 '23 | $358.17M |
| Q4 '23 | $351.71M |
| Q1 '24 | $327.24M |
| Q2 '24 | $351.18M |
| Q3 '24 | $370.51M |
| Q4 '24 | $387.19M |
| Q1 '25 | $358.17M |
| Q2 '25 | $372.06M |
| Q3 '25 | $395.67M |
| Q4 '25 | $440.21M |
| Q1 '26 | $413.63M |
| Q2 '26 | $460.08M |
| Q3 '26e (estimate) | $520M |
The multiple is what the shorts are shorting
Tower trades at 77.2 times trailing earnings against a five-year median of 24.5, with the price 232% above GuruFocus's $58.87 model value 2. The sell side leans the other way: a consensus Moderate Buy and $316 target 1, a $332.93 mean target as of September 15, and September initiations from Barclays−0.09% — Barclays, down 0.09 percent today at Overweight and Mizuho at Outperform 7. An insider's sale is an opinion; a customer's prepayment is an order.
November 2 settles the bet
Tower reports third-quarter results and fourth-quarter guidance on Monday, November 2, 2026 8. Watch whether the fourth-quarter guide carries the $1 billion photonics run rate into 2027 or hedges it. That number prices either the $316 target or the doubled short book.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
