Shares in Navitas Semiconductor (NVTS +4.92%) rose by 15.6% last week amid optimism that the company's long-term growth strategy was on track. Here's why investors are feeling better about the stock this week.
Navitas' transformation
The company's CEO, Chris Allexandre, is quite clear about its future direction. In the company's most recent earnings presentation, he outlined the following: "We are executing a strategic pivot from consumer and mobile markets to these fast-growing, more profitable, more sustainable higher-power segments."
NASDAQ: NVTS
Key Data Points
A big part of that pivot is the partnership with Nvidia to deliver its Gallium Nitride (GaN) and Silicon Carbide (SiC) chips for the new 800V high-voltage direct current (HVDC) data centers, due to launch in 2027.
However, the decision to refocus the company on these end markets and move away from less profitable mobile and consumer businesses in China is negatively impacting revenue. As a result, Wall Street expects revenue to decline again in 2026, from $45.5 million to $36 million.
What happened this week
As such, everything revolves around its ability to open up these higher-power, higher-profit end markets. Consequently, the announcement of a deal this with a large Asian distributor, WT Microelectronics, has sparked excitement in the market. As part of the deal, Navitas is consolidating its distributor base, and WT will "lead customer engagement and design-in activities, backed by robust regional logistics to ensure reliable product availability and fast delivery of Navitas products to its customers in Asia."
Image source: Getty Images.
WT is a major player in the market for buying chips and selling them on to the original equipment manufacturers, and its increased involvement ties in nicely with Navitas' plans. The deal strengthens the case for Navitas as a speculative buy in the AI/datacenter theme. Just be aware that Navitas won't make any profits for the next few years, according to Wall Street.
