Shares in gallium nitride (GaN) and silicon carbide (SiC) semiconductor company Navitas Semiconductor (NVTS -6.71%) soared by 28.4% in June, according to data from S&P Global Market Intelligence. The stock has been on a remarkable run recently, and at the time of writing, it's up more than 80% year to date.
Why Navitas Semiconductor is surging
There's no doubt as to the reason for the move. It comes down to the company's relationship with Nvidia, specifically its potential role in developing data center architecture for the next generation of data centers, which are set to hit the market in 2027.
As previously discussed, the new data centers are likely to be more efficient, require significantly lower maintenance and cooling costs, and offer better reliability. The key to the new 800-volt high-voltage direct (HVDC) current data centers, set to begin in 2027, lies in a fundamental change in how power is distributed from the grid through the data center to the IT racks.
That's where Navitas Semiconductor's GaN and SiC power devices come in. Its GaN chips will help with converting 800-volt HVDC down to the lower voltages necessary to run graphics processing units, which are Nvidia's specialty, in the IT racks. Meanwhile, Navitas' SiC chips are crucial for converting the 13.8 kilovolt alternating current power from the grid to the 800-volt HVDC used in the new data centers.
As such, Navitas' solutions look likely to play a key role in the next generation of data centers that will power the AI revolution.
Ongoing end demand
The news of Nvidia's partnership is obviously a plus. Still, investors will also need to see that capital spending on data centers and end demand from AI applications continue to grow at a rate necessary to support a successful rollout of the new data centers in 2027. And here, Navitas investors have reason to be optimistic. Despite the uncertainties created by the trade tariff conflict, there has been no let-up in the data center spending plans of hyperscalers such as Microsoft and Alphabet.
In addition, anecdotal evidence from data center equipment companies and contractors indicates that investment in data centers continues to run hot.
Image source: Getty Images.
Where next for Navitas
As with hypergrowth stocks, conventional metrics such as trailing earnings won't make much sense right now. Still, Navitas should expect an aggressive sales ramp-up in 2026, ahead of the launch of the 800-volt HVDC data centers in 2027. As such, the ongoing momentum in the development of those sales, along with Nvidia's commentary on the progress of its architecture for the new data centers, is likely to be the key driver of the stock price for the foreseeable future.
