Navitas Semiconductor (NVTS +5.27%) shares rose by a remarkable 61.2% in May, according to data from S&P Global Market Intelligence. The move comes due to a confluence of positive events for the company of the month that helped confirm Navitas as one of the most highly sensitive stocks to the AI infrastructure boom.
Navitas' stock is battleground for AI bulls and bears
It's a company that Wall Street analysts don't expect to generate earnings until 2030. The bears argue that the AI spending "bubble" will burst by then, while the bulls argue that AI infrastructure is only in its early innings and point to continually rising expectations as a sign of growing momentum. The bulls won the argument in May.
NASDAQ: NVTS
Key Data Points
Navitas' exposure to the high-power end markets, most notably AI data centers (it's an Nvidia partner in developing power chips for the next generation of high-voltage data centers), and including energy/grid infrastructure and industrial electrification, puts it at the forefront of the debate. That's why some bears tend to take short positions in the stock, hoping to inordinately benefit from an AI stock correction.
What went right for Navitas in May
However, when the stock has positive catalysts, short sellers are often forced to close their positions aggressively. And Navitas had plenty of catalysts in May.
- The first-quarter earnings, released in early May, saw the company beat estimates for revenue, loss per share, and cash outflows.
- A slew of Wall Street analysts rushed to upgrade their price targets following the earnings report
- Wall Street analysts also updated their models, and according to S&P Global Market Intelligence, the Wall Street consensus for revenue is now 12%, 10%, and 20% higher for 2026, 2027, and 2028
- Other AI-focused companies, such as Nvidia and power components and systems company Vicor, gave strong outlooks for spending in Navitas' end markets.
Image source: Getty Images.
Where next for Navitas
History suggests that an AI bubble will form, and loss-making stocks like Navitas will be badly exposed in the fallout. However, history also suggests that many bears are too early to the bubble-bursting afterparty. History also suggests that even if a bubble bursts, it can leave the industry trending at a baseline growth rate far higher than it was in the early innings of a long-term spending boom.
For now, the bulls are winning the argument, and as long as AI-focused companies are raising growth expectations, that's likely to continue.
