Why Navitas Semiconductor Stock Skyrocketed This Week
Key Points
Gains for the broader market helped set the stage for Navitas's share price to surge higher this week.
The last week played host to strong rallies for some meme stocks and speculative chip plays.
Investors are generally very bullish on semiconductor stocks right now.
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Navitas Semiconductor (NASDAQ: NVTS) stock posted massive gains this week. The chip company's share price rose 40.3% compared to its closing price at the end of the previous week.
Navitas stock got a substantial lift from the bullish backdrop for the broader market, with the S&P 500 up 0.5% in the week and the Nasdaq Composite up 1.5%. While positive momentum for the market helps explain some of Navitas's gains this week, the stock's rally over the week still looks anomalous.
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It wasn't a big news week for Navitas
Despite the explosive rally for the stock, there was little in the way of business-specific news for Navitas. Tech stocks rallied on news that the U.S. and Iran had extended their ceasefire agreement to continue working on a potential agreement to end the war, and the improved geopolitical outlook helped lift the semiconductor stock. In addition to bullish trading for the broader market, Navitas may have been a beneficiary of meme stock momentum and investors betting on a short squeeze.
Semiconductor stocks are red right now
Semiconductor stocks were some of the market's biggest winners over the last week, with big names including Intel, Nvidia, and Marvell posting significant gains over the stretch. Some more speculative names including Poet Technologies and Astera Labs also recorded strong rallies.
Navitas is benefiting from a voracious appetite among investors for high-growth semiconductor companies, and power-chip companies in particular have become a hot trade. On the other hand, the recent rally has seemingly transpired despite little in the way of major news. Navitas has a promising expansion outlook, but investors may want to be cautious with the company's recent rally pushing its forward price-to-sales multiple up to roughly 100.
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Keith Noonan has positions in Intel. The Motley Fool has positions in and recommends Intel and Marvell Technology. The Motley Fool recommends Astera Labs. The Motley Fool has a disclosure policy.
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