Why Navitas Rocketed Higher Today
Key Points
Navitas delivered an expected drop in revenue, but forecast sequential growth in the current quarter.
Management also noted its high-power products for AI data centers and electrical infrastructure became a majority of revenues for the first time.
High short interest likely contributed to the magnitude of gains.
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Shares of power semiconductor company Navitas (NASDAQ: NVTS) rallied 24.5% as of 1:42 p.m. today, following its earnings report last night.
While Navitas reported declining revenues and worsening net losses, this was anticipated, as management is pivoting from Navitas' traditional markets to the new high-power AI data center opportunity.
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But the reason Navitas is rallying higher is that it forecast a sequential increase in revenue, somewhat validating management's strategy and in these early stages of its turnaround plan.
Is Navitas bottom in?
In the fourth quarter, Navitas saw its revenue decline nearly 60% relative to last year to $7.3 million, while adjusted (non-GAAP) losses per share totaled ($0.14). That revenue metric came in slightly higher than expected, while the bottom line slightly missed expectations.
While these numbers don't seem like grounds for celebration, it was likely management's forward guidance that provided the lift. In the first quarter, management expects revenue to increase between $8.0 million and $8.5 million, with gross margins and operating expenses largely stable. Furthermore, management noted the "high-power markets," meaning the AI data center product opportunity, had crossed over to account for a majority of revenue for the first time.
Image source: Getty Images.
Navitas may look expensive, but...
After today's rise, Navitas's market cap has surged to over $2.3 billion, which seems like a lofty valuation for a company operating at a $30 million revenue run rate. However, Navitas also has a solid balance sheet after several equity raises last year, with cash of $237 million and no debt. Furthermore, new CEO Chris Allexandre highlighted some new product milestones aimed at the massive and growing AI data center market, including the new 800V HVDC AI data center architecture envisioned by Nvidia in a May 2025 blog post.
As long as the story about Navitas' turnaround into an artificial intelligence beneficiary remains intact, look for the stock to benefit. Furthermore, today's big jump may be affected by widespread short-covering, given that 23.3% of Navitas' public share float was sold short as of the end of January.
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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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