Navitas Semiconductor: A Contrarian Gem Amid Insider Selling and Tech Triumphs?

The market is buzzing with conflicting signals about Navitas Semiconductor (NVTS): its CEO just unloaded a massive chunk of shares, but the stock is soaring on a groundbreaking partnership with NVIDIA. Is this a red flag—or a golden opportunity? Let's dig in.

The Insider Sale: A Cause for Concern or a Smart Move?

On May 23, 2025, CEO Eugene Sheridan sold 2.16 million shares of Navitas stock, netting roughly $10 million. At first glance, this looks worrisome. But here's why it might not be:

• The 10b5-1 Plan: The sale was executed under a pre-arranged Rule 10b5-1 trading plan—a strategy insiders use to avoid allegations of insider trading. This means Sheridan wasn't reacting to recent news (like the NVIDIA deal) but had already planned the sale months earlier.
• Ownership Still Strong: After the sale, he retains 4.94 million shares, or 2.6% of the company's outstanding stock. That's a significant stake, suggesting he still believes in Navitas' future.
• Historical Context: Sheridan has been a disciplined seller over the years, offloading shares steadily since 2021. This isn't a panic dump—it's likely wealth diversification for someone who's already betting big on Navitas.

Why the Stock is Exploding: NVIDIA and the GaN Revolution

The real story here is Navitas' strategic win with NVIDIA. On May 27, NVTS shares skyrocketed from $4.53 to $7.53—a 66% intraday surge—after announcing that NVIDIA selected Navitas' gallium nitride (GaN) chips for its next-gen data center systems. This isn't just hype:

• The Tech Edge: GaN chips are 10x more efficient than traditional silicon in converting power, critical for AI infrastructure. NVIDIA's data centers, powering everything from self-driving cars to generative AI, need this tech to stay ahead.
• Revenue Boost: Analysts now see revenue jumping from $83 million in 2024 to $459 million by 2027, fueled by this partnership. The stock's 2025 surge erased years of stagnation.

The Contrarian Case: Buy Now While the Skeptics Sell

Here's why this is a buy signal despite the insider sale:

1. Valuation Still Makes Sense:
2. Navitas trades at 10x forward revenue—a discount to peers like ON Semiconductor (ON) or Texas Instruments (TXN), which trade at 3x-4x higher multiples.

3. Analysts' revised 12-month price target of $5.67 (up from $3.79 pre-surge) suggests 30% upside from current levels.

4. Short Squeeze Fueling the Rally:

5. Short interest was 12.8% of shares outstanding before the NVIDIA deal, meaning bears are getting crushed as the stock climbs. This creates a self-fulfilling rally as shorts cover their positions.

6. CEO's Stake is a Vote of Confidence:

7. Despite selling, Sheridan's remaining shares are worth $28 million at current prices—a big chunk of his net worth. He'd be crazy to dump the stock if he thought it was doomed.

Risks to Watch

• Competition: Traditional players like Infineon or Intel could replicate GaN tech, but Navitas' early mover advantage is huge.
• Execution Risk: Delivering on the NVIDIA deal requires flawless scaling—any hiccups could spook investors.

Action Alert: Buy the Dip—This is a 5x Stock

Here's the bottom line: Navitas is at a critical inflection point. The NVIDIA partnership isn't just a win—it's a multi-year tailwind in the $200 billion AI infrastructure market.

While the CEO's sale is eye-catching, it's dwarfed by the strategic brilliance of this company. If you can stomach volatility, now's the time to stack the shares.

Cramer's Call: Buy NVTS around $6.00. Set a stop at $4.50 and aim for $7.50+ in the next 6 months. This isn't just a tech play—it's a once-in-a-decade bet on power efficiency in the AI era. Don't let the insider sale distract you from the bigger picture.

Final Take: Navitas is a contrarian gem—a stock being sold by insiders for personal reasons while the underlying story screams growth. If you're in for the long haul, this could be your ticket to the next big tech boom.