Data center construction has been accelerating over the past few years; however, the industry has been encountering issues. Among other things, power and water availability for cooling have become major bottlenecks, which opens up demand for companies that can solve these issues.
Enter Navitas Semiconductor (NVTS 2.88%). The pure-play power semiconductor company manufactures gallium nitride and silicon carbide components used in a wide range of applications, from mobile phone chargers to, you guessed it, data centers.
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Last year, the stock traded between $2 and $3 per share. Now, it's $7.78, as of the previous close. The stock is also up over 200% since this time last year.
Understandably, some investors are worried that they missed the ride up. But that's not the case. I might even go so far as to say that the best is yet to come.
GaN: Powering the next generation of innovation
At the center of Navitas' offerings are its Gallium Nitride (GaN) and Silicon Carbide (SiC) chips, which offer several advantages over traditional silicon.
According to the company's website, its GaNFast, GaNSense, and SiC chips can deliver up to 40% higher energy efficiency than traditional silicon-based power systems. They also allow for monolithic integration, save space, and have faster switching speeds, which leads to less heat generation, giving the dual benefit of reduced power consumption and lower cooling requirements.
Data centers are hungry, hungry hippos
According to the Department of Energy, data centers consume 10 to 50 times the energy of a typical commercial office building. Meanwhile, a recent study published on the Environmental and Energy Study Institute's website states that large data centers consume up to 5 million gallons of water per day. To put that into perspective, that's about the same consumption as a town with up to 50,000 residents.
So, any measure or technology that can reduce these figures will be worth its weight in gold, as they'd translate to cost savings and environmental benefits. Navitas' GaN tech fits that requirement almost to a T, offering energy and cooling solution savings without compromising on performance.
The Nvidia partnership
Early this year, Navitas announced a partnership with Nvidia, in which the former will provide GaN and SiC power semiconductors to develop a next-generation 800V high-voltage direct current (HVDC) architecture for artificial intelligence (AI) data centers.
The stock was trading at $1.91 on the day of the announcement, back on May 21, 2025. Navitas stock jumped to $6.50 on May 27, then reached a new 52-week high of $9.48 a few weeks later. So, it would be fair to say that the market took notice.
But this isn't where the story ends.
What could make Navitas stock grow?
Navitas' partnership with Nvidia can be considered both a proof of concept and a demonstration of trust. If successful, and I haven't seen any indication that it wouldn't be, the deal can serve as a blueprint for scaling GaN and SiC solutions across the broader AI and data center markets.
The company currently estimates that GaN and SiC technologies will be worth $2.6 billion by 2030. And with it at the forefront of the industry, there's an immense potential for it to take a large slice of that pie.
Even better, GaN and SiC power components are also experiencing a rise in demand in EV production, solar infrastructure, industrial applications, and energy storage systems.
And that's what's exciting about the company: If Navitas can scale and execute well, it wouldn't be tapping into just one booming market. It would be positioning itself to grow alongside multiple industries with soaring demands for efficient, high-performance power solutions. That's why I think the Nvidia deal is just the tip of the iceberg.
Currently, Navitas stock is trading at around $8, and over the last 52 weeks, the stock has traded between $1.52 and $9.48, implying above-average volatility in the stock price. A 60-month beta of 3.03 means Navitas stock is likely to move 3 times as much as the S&P 500. The risk is high, but so are the rewards, if it works out.
Verdict
So is it too late to buy Navitas? If you have a long-term time horizon, I don't think so. Again, the company's potential is already in the spotlight, and with today's soaring energy demands, I see a clear runway for Navitas to capture a significant market share.
Still, I'd time my entries during pullbacks or dips. I, for one, am excited for what Navitas has in store.
