Why Navitas Semiconductor Stock Is Plummeting Today

Navitas Semiconductor (NASDAQ: NVTS) stock is getting crushed in Tuesday's trading. The chip specialist's share price was down 19.4% as of 2:15 p.m. ET and had been off as much as 21.8% earlier in the daily session.

After the market closed yesterday, Navitas published fourth-quarter results that came in below Wall Street's expectations. Making matters worse, tech and artificial intelligence (AI) stocks are seeing substantial sell-offs in response to macroeconomic risks and other negative catalysts.

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Navitas stock sinks on weak Q4 results and forward guidance

Navitas posted a loss of $0.21 per share on revenue of $18 million in the fourth quarter, falling short of the consensus Wall Street target's call for a per-share loss of $0.14 on sales of roughly $19 million. Revenue for the period fell 31% year over year, and the company's operating loss expanded to $39 million -- up from a loss of $26.8 million in the prior-year quarter.

For the first quarter, Navitas is guiding for sales to come in between $13 million and $15 million, pointing to another big sequential quarterly sales decline. On the other hand, management guided for a gross margin of roughly 38% -- up significantly from the 12.4% gross margin it posted in Q4 and the 34.4% margin it posted for the year.

Valuation pressures in tech are adding to the pullback

In addition to its disappointing Q4 results and guidance, Navitas's valuation is getting hit by macroeconomic pressures and other bearish catalysts today. Investors are selling out of tech stocks in response to inflationary concerns, new tariffs on the horizon, and reports that the Trump administration intends to ramp up export restrictions on semiconductors and chip manufacturing equipment.

Investors also appear to be reducing exposure to tech stocks out of concern that Nvidia could serve up softer-than-expected Q4 results and guidance tomorrow. Notably, Navitas supplies components for Nvidia's high-end processors and already served up underwhelming performance with its own Q4 release, and it's possible the AI leader's report will prompt more volatility.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.