Navitas Semiconductor Shares Plummet 14.7% Amid Q2 Earnings and Capital Raising Concerns

Navitas Semiconductor shares fell 14.7% due to its second-quarter results, which were in line with analyst expectations. The company's losses are expected to continue for the next few years, and the sale of 20 million shares to raise capital diluted existing shareholders' claim on future profits and cash flows. Despite this, the company's partnership with Nvidia and its silicon carbide and gallium nitride solutions could play a key role in supporting AI data centers and drive growth.

Navitas Semiconductor (NASDAQ: NVTS) reported its second-quarter 2025 earnings, with shares falling 14.7% due to a revenue decline and a non-GAAP loss per share. The company's Q2 results, which were in line with analyst expectations, reflect the challenges of scaling a niche technology in a capital-intensive industry. Revenue declined 30% year-over-year to $14.5 million, while the non-GAAP loss of $0.25 per share underscored operational inefficiencies [1].

Despite the short-term setback, Navitas' strategic focus on artificial intelligence (AI) data centers and electric vehicles (EVs) positions it for long-term growth. The company's partnership with NVIDIA and its silicon carbide (SiC) and gallium nitride (GaN) solutions could play a key role in supporting AI data centers and drive growth. Navitas' 4.5 kW AC/DC server power supply, with 97% efficiency and 140 W/in³ power density, is tailored for AI data centers, and its collaboration with NVIDIA on 800V power systems further solidifies its leadership in this sector [2].

Navitas' balance sheet remains robust, with $161.2 million in cash and no debt, allowing it to raise $100 million via a secondary offering. This capital will fund expansion into AI data centers and energy infrastructure, sectors where GaN's advantages in efficiency and power density are unmatched. The company's long-term goal is to enable 240–480 kW power levels in AI data centers by 2027, a market segment projected to grow at a 31.1% CAGR [1].

However, Navitas faces execution risks, including EV adoption delays and AI competition. The company's P/S ratio of 1.5x and EV/EBITDA of -10x suggest undervaluation relative to peers like Infineon and Wolfspeed. Nevertheless, investors with a 3–5 year horizon may find Navitas' current valuation offers a margin of safety, particularly given the sector's potential to compound at 20%+ CAGR [1].

Key risks to monitor include execution on EV design wins, commodity pricing pressures, and regulatory shifts. Navitas' strategic positioning in AI data centers and EVs, combined with its strong balance sheet, makes it a compelling long-term play. However, patience and a clear-eyed assessment of execution risks are essential.

References:
[1] https://www.ainvest.com/news/navitas-semiconductor-q2-earnings-buying-opportunity-high-growth-disruptive-power-chip-sector-2508/
[2] https://www.ainvest.com/news/navitas-semiconductor-nvts-ai-data-center-semiconductor-opportunity-strategic-positioning-2-6b-gan-sic-growth-market-2508/