Tower Semiconductor Ltd (NASDAQ:TSEM) tanked in trading on Thursday, after the company reported upbeat third-quarter results.

The company reported strong results and announced higher-than-expected guidance on "aggressive AI-levered demand," according to Benchmark.

Analyst Cody Acree reiterated a Buy rating on Tower Semiconductor while raising the price target from $55 to $60.

The Tower Semiconductor Thesis: The company reported sales of $371 million and earnings of 57 cents per share, higher than consensus of $370 million and 53 cents per share, respectively, Acree said in the note.

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Tower Semiconductor announced its December quarter revenues about $9 million higher than consensus on robust demand from "its broader RF (Radio Frequency) business, which includes both RF Mobile, RF SOI switches for the smartphone market, and RF Infrastructure demand for Data Center connectivity applications," the analyst stated.

"With solid customer demand increasing for its SiGe and SiPho products for optical transceivers servicing AI Data Center applications, Tower is undertaking a new $350 million capacity expansion initiative, where it is planning to invest in multiple existing factories to significantly increase its ability to meet rapidly increasing customer forecasts," he further wrote.

TSEM Price Action: Shares of Tower Semiconductor had declined by 4.81% to $46.09 at the time of publication on Thursday.

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