Is Tower Semiconductor Ltd. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Tower Semiconductor Ltd. has moved from attractive to expensive, indicating a shift towards overvaluation. The company appears to be overvalued based on its P/E ratio of 23, which is significantly higher than its peer Amkor Technology, Inc. at 23.85 and Cirrus Logic, Inc. at 17.26. Additionally, the EV to EBITDA ratio stands at 7.47, which is also higher than the industry average, suggesting that the market may be pricing in excessive growth expectations.
In terms of returns, Tower Semiconductor has outperformed the S&P 500 across various time frames, with a year-to-date return of 43.20% compared to the S&P 500's 13.30%. However, the long-term 3-year return of 70.11% is notably lower than the S&P 500's 81.19%, which raises concerns about sustainability. Overall, Tower Semiconductor Ltd. is considered overvalued given the current valuation metrics and peer comparisons.