Tower Semiconductor Plunges 5.4% as AI Rally Cools

Tower Semiconductor (TSEM) faced a sharp correction, sinking about 5% intraday after insider selling, as CEO Russell Ellwanger sold roughly $19.6 million and total insider sales reached $45.5 million in three months, signaling souring sentiment despite strong Q2 results. The stock’s weakness comes amid broader semiconductor volatility and sector-wide macro concerns, with investors rotating away from AI-led growth names even as Nvidia showed relative resilience. GuruFocus data on Tower warns that the shares are significantly overvalued relative to its GF Value, with a GF Value of $63.20 versus a current price around $240, and a P/E well above historical medians, suggesting heightened risk of a correction. In parallel, Taiwan Semiconductor Manufacturing Co (TSM) also traded lower, by about 4%, and sits about 26.7% overvalued versus its GF Value of $326.37, despite a strong GF Score of 97/100 and robust revenue momentum in July. The market narrative appears to be a valuation squeeze on AI beneficiaries, as investors reassess whether forward growth justifies current premiums on both Tower and TSM, even as insider activity and margin risk remain in focus.