After a jaw-dropping one-day rally of +164.3%, Navitas Semiconductor Corporation (NASDAQ: NVTS) has made headlines again—thanks to its partnership with tech giant NVIDIA (NVDA). But before you jump on the bandwagon, it’s crucial to look beyond the hype and evaluate the fundamentals.
While NVTS’ collaboration with NVDA hints at an exciting future in high-voltage AI data center power systems, the stock’s meteoric rise may not be sustainable in the short term. In fact, smart investors might want to wait for a pullback before entering this high-beta stock.
The Hype: Why NVTS Surged
Navitas’ partnership with NVIDIA is built around a next-generation 800V HVDC architecture that promises better power delivery and reduced copper usage—an essential upgrade as data centers grow increasingly power-hungry.
The company, known for its gallium nitride (GaN) and silicon carbide (SiC) technologies, is betting big on powering future AI infrastructure. This partnership puts NVTS squarely in the spotlight of the AI revolution, much like how NVIDIA’s backing previously pumped life into other stocks like SoundHound AI (SOUN).
That said, the actual impact of this partnership will take time to materialize. NVIDIA’s new rack system—Rubin Ultra—isn’t even scheduled for launch until late 2027. So, despite the massive rally, real revenue from this deal is still years away.
The Reality: Fundamentals Don’t Justify the Valuation (Yet)
Here’s the rub—NVTS is still burning cash, and the fundamentals don’t support the current valuation:
- Cash Burn: Q1’25 operating losses stood at -$47.2M.
- Deteriorating Balance Sheet: Net cash has dropped by 42% YoY.
- Future Revenues: Revenue impact from NVIDIA starts H2 2025 at best, with full benefit likely only from 2027 onward.
Meanwhile, the stock is now trading at a Forward EV/Sales multiple of 14.06x, well above its historical average of 5.19x and far beyond industry peers like ON Semiconductor (3.1x) and STMicroelectronics (1.74x).
This level of exuberance is hard to justify, especially when peer companies with actual current profitability are trading at lower valuations.
Dilution Incoming? History Suggests So
One big red flag is NVTS’ likely need to raise more capital, which could dilute existing shareholders. With its cash reserves dwindling and operations still not generating profit, a secondary offering could be on the horizon—especially while the stock is hot.
We’ve seen this playbook before with stocks like SoundHound. Companies in growth mode often take advantage of spikes in stock prices to shore up their balance sheets. This could mean short-term pain for anyone buying in at these elevated levels.
High Short Interest = High Volatility
Another sign of caution: short interest on NVTS spiked a whopping +5,318% on May 22, 2025. That’s not just bearish sentiment—it’s a warning that traders expect the stock to pull back sharply.
Add to this the stock’s beta of 1.77, and you have a recipe for extreme swings. NVTS has traded anywhere from $1.52 to $8.50 over the past year. A revisit to the lower end of that range wouldn’t be shocking.
Should You Buy NVTS Stock Now?
In a word: No.
Rating: HOLD
While NVTS is well-positioned for the long term, current prices reflect future growth that’s not yet on the books. With capital raises likely, and real revenue acceleration only expected from 2026-2027, buying now is akin to chasing a rally with limited upside and significant downside risk.
If you’re bullish on NVTS’ future (and there’s a strong case to be made for that), the best strategy is to wait for the dust to settle. Target entry? Low single digits, where risk-reward improves drastically.
Final Thoughts
Navitas Semiconductor is an exciting player in a crucial space—powering the AI revolution with next-gen semiconductor tech. But the market may be getting ahead of itself, pricing in years of growth that haven’t yet materialized.
Don’t let FOMO drive your investment decisions. Sometimes, the best move is no move at all—at least for now.
Wait for the dip. Then ride the wave.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research or consult a professional before making investment decisions.
