Navitas Sees $2.6B AI Data Center Opportunity Amidst Near-Term Revenue Softness

Navitas Semiconductor reported Q2 revenues of $14.5 million, in line with guidance, while CEO Eugene Sheridan highlighted industry downturn, slowdown in solar, industrial, and EV sectors, and ongoing tariffs as headwinds. The company identified a $2.6 billion opportunity in AI data center market and is sharpening its strategic focus. Sheridan anticipates near-term revenue softness due to these challenges.

Navitas Semiconductor Corporation (NVTS) reported Q2 revenues of $14.5 million, in line with guidance, while CEO Eugene Sheridan highlighted industry downturn, slowdown in solar, industrial, and EV sectors, and ongoing tariffs as headwinds. The company identified a $2.6 billion opportunity in the AI data center market and is sharpening its strategic focus.

Sheridan emphasized a strategic shift: "We have decided to more aggressively transition and invest in a leadership position for AI data centers." He announced that NVIDIA has selected Navitas to support their vision for next-generation 800-volt data centers and that the company raised nearly $100 million in new capital during the quarter. Sheridan also detailed a new partnership with Powerchip as a GaN foundry partner, enabling an 8-inch, low-cost manufacturing platform. Over the next 2 plus years, Navitas expects its high-voltage customers to transition to Powerchip's 8-inch factory, which can produce nearly 80% more chips per wafer compared to 6-inch for little incremental cost.

The company will "sharpen our focus on the high-end performance applications of the mobile, consumer and appliance sectors" and "reduce our focus, investment and revenue expectations around the more mainstream, price-sensitive applications." CFO Todd H. Glickman stated that revenue in the second quarter of 2025 was at the midpoint of guidance at $14.5 million. Gross margin in the second quarter was 38.5%, up sequentially compared to 38.1% in the first quarter, primarily due to a slight favorable change in product mix. Operating expenses declined to $16.1 million in Q2 from $17.2 million in Q1.

Outlook for Q3 2025: Glickman provided Q3 2025 guidance of $10 million plus or minus $500,000. He explained this reduction reflects adverse impacts from China tariff risks for their silicon carbide business and their strategic decision to de-prioritize lower-margin China mobile business while accelerating investment in AI data centers and associated new energy infrastructure. Gross margin for Q3 is expected to be flat compared to the second quarter, with guidance at 38.5% plus or minus 50 basis points. Operating expenses are anticipated at $15.5 million for Q3.

Management indicated that this transition toward AI data center and energy infrastructure markets will take multiple quarters and emphasized that the company is "well-positioned with the resources and runway to execute on opportunities for our next wave of growth."

Financial Results: Q2 2025 revenue was $14.5 million, gross margin was 38.5%, and operating expenses declined to $16.1 million. The operating loss from operations improved to $10.6 million from $11.8 million in Q1. Accounts receivable was $12.5 million and inventory declined to $15.1 million, including a $3 million China SiC inventory reserve. Cash and cash equivalents at quarter end were $161 million with no debt. The company raised approximately $97 million from at-the-market offerings during Q2.

Analysts pressed management on revenue declines, exposure to tariffs, and the timeline for AI data center ramp, reflecting a slightly negative to neutral tone focused on near-term challenges and clarification of strategic shifts. Management maintained a confident tone regarding long-term growth, repeatedly emphasizing strategic positioning and cost discipline.

Navitas Semiconductor Corporation is executing a major strategic shift, prioritizing leadership in the fast-growing AI data center and energy infrastructure sectors while reducing exposure to lower-margin consumer markets. Despite near-term revenue softness driven by industry headwinds, China tariffs, and selective mobile business reduction, the company is leveraging partnerships, new capital, and manufacturing efficiencies to position itself for substantial growth as AI data center opportunities ramp in late 2026 and beyond.

References:
[1] https://seekingalpha.com/news/4478051-navitas-outlines-2_6b-ai-data-center-opportunity-as-it-sharpens-strategic-focus-and
[2] https://seekingalpha.com/article/4808544-navitas-semiconductor-corporation-nvts-q2-2025-earnings-call-transcript