NVTS vs. ADI: Which Semiconductor Stock is a Better Buy Now?

Core Insights - Navitas Semiconductor (NVTS) and Analog Devices (ADI) are experiencing growth due to increasing semiconductor sales, projected to grow in double digits by 2025, driven by AI server and EV demand [1][6] - Year-to-date, Navitas shares have surged by 80.2%, while ADI has increased by 18.7%. However, in the past month, ADI outperformed with a 9.2% rise compared to Navitas' 24.9% decline [2] Navitas Semiconductor (NVTS) - Navitas focuses on power semiconductor solutions, particularly gallium nitride (GaN) and silicon carbide (SiC) technologies, with a significant market opportunity of $2.6 billion in AI data centers [5][6] - The company has established partnerships with major players like NVIDIA and Powerchip, enhancing its market position and efficiency in production [6][8] - Despite the growth potential, NVTS reported third-quarter 2025 revenues of $10 million, impacted by China tariff risks and a strategic shift away from lower-margin businesses [9][19] Analog Devices (ADI) - ADI is well-positioned in high-performance analog markets, particularly benefiting from the automotive sector, which constitutes 30% of its revenues, and is expected to achieve record automotive revenues in 2025 [10][11] - The industrial segment, accounting for 44% of ADI's third-quarter revenues, is projected to see double-digit growth, driven by a robust industrial automation business [12] - ADI maintains strong liquidity with a cash balance of $2.32 billion and free cash flow of $1.09 billion in the third quarter of fiscal 2025 [13] Earnings Estimates and Valuation - The Zacks Consensus Estimate for ADI's fiscal 2025 earnings is $7.69 per share, reflecting a 20.5% increase from fiscal 2024 [14] - In contrast, Navitas' loss estimate for 2025 has widened to 22 cents per share, indicating challenges ahead [15] - Valuation metrics show that ADI is trading at a forward Price/Sales ratio of 10.5X, while Navitas is at 22X, suggesting that ADI may be a more attractive investment [16] Investment Outlook - ADI is favored over Navitas due to its broad-based recovery, margin resilience, and strong free cash flow generation, supported by growth in automation, AI infrastructure, and automotive electrification [20] - Navitas faces near-term challenges from sluggish demand in solar, EV, and industrial markets, along with tariff impacts and the removal of tax credits [19]