Is Navitas Semiconductor Stock a buy After Nvidia Enters the Room?

Yesterday, Navitas Semiconductor (NASDAQ: NVTS) stock exploded by more than 160% following news that Nvidia (NASDAQ: NVDA) has selected the company to help develop 800-volt, high-voltage direct current (HVDC) power systems for its next-generation artificial intelligence (AI) data centers.

With roughly 12.8% of Navitas shares sold short before the announcement and a market cap still hovering around $886 million as of this writing, this explosive move has triggered a mix of excitement and skepticism among investors.

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The question now is whether this rally has staying power -- or whether investors have already missed the moment. The answer may depend on understanding not just what happened, but why it matters for the future of AI infrastructure. Read on to find out more.

Nvidia's endorsement signals a paradigm shift

The Nvidia partnership isn't window dressing -- it positions Navitas at the center of one of the most ambitious infrastructure overhauls in AI history. The collaboration involves replacing today's antiquated 54V power architecture with a revolutionary 800V HVDC standard capable of supporting IT racks of 1 megawatt or more.

To put this in perspective, current data center infrastructure maxes out at a few hundred kilowatts per rack. Nvidia's next-generation "Kyber" rack-scale systems, powering graphics processing units (GPUs) like the upcoming Rubin Ultra, will demand unprecedented power density. The shift to 800V HVDC isn't just an upgrade -- it's a complete rethinking of how power flows through the digital backbone of AI.

Why does this matter? Because power delivery is quickly becoming the bottleneck for AI expansion. As compute requirements explode, traditional power systems are hitting physical limits. Nvidia's projections suggest the shift to HVDC could improve data center power efficiency by 5%, cut copper use by 45%, and reduce maintenance costs by up to 70%. For hyperscale operators managing thousands of racks, these improvements translate to millions in operational savings.

Navitas' gallium nitride (GaN) and silicon carbide (SiC) semiconductors are central to delivering this transformation. Its GaNFast and GeneSiC technologies enable the high-frequency switching and thermal efficiency required for 800V systems -- capabilities that traditional silicon simply cannot match.

The technology advantage

What sets Navitas apart isn't just its technology -- it's the company's integrated approach. While competitors focus on individual components, Navitas has developed complete power system solutions. Their recent demonstration of an 8.5 kW AI data center power supply achieving 98% efficiency isn't just impressive -- it's production-ready.

The company's GaNSafe power ICs (integrated circuits) include integrated protection features that traditional discrete solutions lack. Meanwhile, its GeneSiC silicon carbide devices utilize proprietary "trench-assisted planar" technology that delivers superior performance and reliability.

Short interest added rocket fuel to the rally

The magnitude of the stock's move wasn't driven by fundamentals alone. As of the latest report, 12.8% of Navitas' float was sold short -- an unusually high level for a small-cap tech name. This situation created a powder keg waiting for a catalyst.

Short squeezes can be violent and brief, and the rally from under $2 to nearly $5 in a single session reflects a technical unwind as much as a fundamental repricing. The high short interest suggests many investors had written off Navitas as another struggling semiconductor company. The Nvidia announcement forced a rapid reassessment.

But here's what makes this different from typical short squeezes: The underlying catalyst has substance. This isn't a meme stock rally driven by social media hype -- it's a fundamental shift in how one of the world's most important technology companies approaches power infrastructure.

Financial reality check

Despite the excitement, Navitas' financials still demand caution. The company generated approximately $83 million in revenue in 2024 but posted a net loss of nearly the same amount.

The bottom line is that the path to consistent profitability remains unclear without significant design wins and volume ramps. That's not surprising given the large short interest, and this Nvidia news doesn't immediately change the situation.

A calculated speculation with asymmetric upside

Navitas remains a speculative stock, but the asymmetric upside has sharpened considerably. The Nvidia partnership validates both the technology and market opportunity while providing a credible path to scale revenue. A market cap under $900 million leaves substantial room for revaluation if the collaboration leads to broader industry adoption.

What's the investing takeaway? Navitas has suddenly moved from obscurity to center stage in the next phase of the AI infrastructure build. The stock may give back some of its recent gains as momentum fades, but the company's opportunity has suddenly expanded in a way that's impossible to ignore. That said, this small-cap tech stock should still be viewed as a high-risk, high-reward option on the larger AI infrastructure build.

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George Budwell has positions in Navitas Semiconductor and Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.