Why Navitas Semiconductor Stock Skyrocketed This Week

Navitas Semiconductor (NASDAQ: NVTS) stock posted huge gains across the last week of trading. The company’s share price surged 78.1% compared to its valuation level at the end of the previous week’s market close.

Navitas published a press release on Oct. 13 announcing that it was providing new chips for Nvidia’s next-generation artificial intelligence (AI) factory computing platform. With the benefit of the recent rally, the stock is now up roughly 311% year to date.

Navitas stock soared recently after the company announced that it’s providing gallium nitride (GaN) and silicon carbide (SiC) power semiconductors that will be used in Nvidia’s next-gen data centers. Nvidia continues to be the clear-cut leader in advanced graphics processing units (GPUs) used to power AI data centers, and scoring a new partnership in artificial intelligence looks to be a big win for Navitas.

Following recent gains, Navitas now has a market capitalization of roughly $3.1 billion. At that valuation level, the company is trading at approximately 64 times this year’s expected sales.

With its last business update, Navitas guided for sales of $10 million in the third quarter. This target actually suggests a significant sequential quarterly sales decline compared to the business’s revenue of $14.5 million in the second quarter.

Despite the sales drop off, investors are betting that Navitas’ growth is poised to reaccelerate in the not-too-distant future. It’s not unusual for a relatively small chip company to see uneven sales performance in early growth phases, and shareholders are betting that Navitas’ partnerships and design wins will drive more strong gains.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Navitas Semiconductor Stock Skyrocketed This Week was originally published by The Motley Fool