The SiC and GaN chipmaker could surprise the short sellers.Five months ago, Wolfspeed (WOLF 1.07%) seemed doomed as its growth stalled out, its net losses widened, and its debt levels skyrocketed. On June 30, the chipmaker filed for Chapter 11 bankruptcy protection as its stock plummeted to an all-time low of $0.39 per share.But on Sept. 29, it emerged from bankruptcy protection after reducing its total debt by roughly 70%, extending its remaining debt maturities to 2030, and reducing its annual cash intere ...

Core Insights - Navitas Semiconductor (NVTS) and Advanced Micro Devices (AMD) are key players in the semiconductor industry, particularly in the context of AI-driven computing [1][2] - Both companies are investing heavily in next-generation semiconductor chips for AI applications, but their investment outlooks differ [2] Navitas Semiconductor Overview - Navitas Semiconductor is focusing on high-power markets and has been included in NVIDIA's 800-volt AI factory ecosystem, which is a significant development [3] - The company offers both Gallium nitride (GaN) and Silicon carbide (SiC) solutions across the full power path, with new mid-voltage GaN devices and high-voltage SiC modules being sampled [4] - There is increasing customer interest in Navitas's products as AI data centers adopt new power architectures, which is expected to drive growth [5] - Gradual growth is anticipated in 2026, with a larger opportunity in 2027 as new AI power designs gain traction [6] - Navitas Semiconductor's stock has surged 133.1% year-to-date, reflecting strong market performance [13] Advanced Micro Devices Overview - AMD reported record Data Center revenues of $4.3 billion in Q3 2025, a 22% year-over-year increase, driven by strong sales of EPYC server processors and Instinct MI350 GPUs [7] - The company has signed a multi-year agreement with OpenAI for MI450 GPUs, potentially generating over $100 billion in revenue [9] - Despite strong growth in the data center segment, AMD faces challenges such as an 8% decline in the embedded segment and rising operating expenses [10] - AMD's stock has gained 79% year-to-date, but it is trading at a forward sales multiple of 7.94X, lower than Navitas Semiconductor's 44.59X [13][16] Earnings Estimates and Valuation - For 2025, NVTS is expected to report a loss of 21 cents per share, while AMD's earnings estimate is $3.96 per share [11] - Analysts are becoming more bullish on NVTS, as indicated by the earnings estimate revision trend [12] - Navitas Semiconductor's higher valuation is justified by its inclusion in NVIDIA's ecosystem and improving financial performance [16] Conclusion - Navitas Semiconductor is positioned favorably for growth in AI chip markets, with a focus on GaN and SiC technologies [18] - AMD is experiencing growth in data center CPUs and AI GPUs but faces near-term challenges that may hinder overall performance [19] - Navitas Semiconductor holds a Zacks Rank 2 (Buy), while AMD has a Zacks Rank 3 (Hold), indicating a more favorable investment case for NVTS [20]

Core Insights - The article compares two semiconductor companies, Navitas and Wolfspeed, focusing on their business models, market positions, and financial outlooks in the SiC and GaN chip markets [4][8][14]. Company Overview - Wolfspeed primarily manufactures SiC materials and power devices, having sold its GaN-on-SiC chip business to MACOM in late 2023 [1]. - Navitas generates most of its revenue from GaNFast Power ICs and has expanded into the SiC market by acquiring GeneSiC in 2022, although its SiC business remains smaller than its GaN operations [2][3]. Market Dynamics - The combined SiC and GaN chip market is projected to grow at a compound annual growth rate (CAGR) of 25% from 2024 to 2032, as these chips replace traditional silicon chips in various applications [4][7]. - SiC chips are suited for high-voltage applications, while GaN chips are more appropriate for low to mid-voltage devices [5][6]. Financial Performance - Both companies faced declining sales due to a cooling market for EVs, solar, and industrial applications. Navitas is expected to see a revenue decline of 44% to $46 million in 2025, while Wolfspeed's revenue is projected to rise 6% to $800 million in fiscal 2026 [8][9][11]. - Wolfspeed emerged from bankruptcy in September 2023, reducing its total debt by 70% and annual cash interest expenses by about 60% [8][12]. Valuation and Investment Outlook - Wolfspeed has an enterprise value of $5.1 billion, trading at five times next year's sales, while Navitas has an enterprise value of $1.7 billion, trading at 42 times next year's sales [13]. - The article suggests that Wolfspeed may be undervalued due to its recent bankruptcy and high debt levels, while Navitas's valuation may be inflated by its deal with Nvidia [14]. Conclusion - The analysis indicates that while Navitas may have higher growth potential in the long term, Wolfspeed is currently a more reasonably valued investment option due to its lower price-to-sales ratio and healthier near-term growth rates [15].

Core Insights - Navitas Semiconductor (NVTS) is expected to report third-quarter 2025 revenues of approximately $10 million, reflecting a year-over-year decline of 53.4% compared to the previous year [1][9] - The consensus estimate for loss per share is set at 5 cents, unchanged over the past 60 days, compared to a loss of 6 cents per share in the same quarter last year [2] Revenue and Earnings Estimates - The Zacks Consensus Estimate for third-quarter revenues is $10.1 million, indicating a significant decline [1] - The earnings per share (EPS) estimates have remained stable at -0.05 for the current quarter and next quarter [3] Factors Influencing Performance - Navitas Semiconductor is positioned to benefit from the increasing demand for power semiconductors, particularly through its GaN and SiC technologies, which are suitable for AI data centers and energy-efficient systems [6][7] - The company has expanded its partnership with Xiaomi to develop a compact and efficient charger, which may positively impact performance [8] Production and Cost Efficiency - The transition to 8-inch GaN wafer production with Powerchip aims to enhance production efficiency, allowing for approximately 80% more chips at lower costs [10][18] Market Challenges - The company faces near-term challenges, including tariff risks in China, reduced demand in the electric vehicle (EV) sector, and a strategic reduction in low-margin mobile business exposure [11][19] - Management anticipates softer quarters ahead before new AI and infrastructure projects can drive higher revenues [19] Stock Performance and Valuation - Navitas Semiconductor shares have increased by 259.4% year-to-date, outperforming the Zacks Electronics - Semiconductors industry growth of 52.4% [12] - The company's forward 12-month price-to-sales (P/S) ratio is significantly higher at 53.43X compared to the industry average of 10.15X, indicating a premium valuation [15][17]

Core Insights - Navitas Semiconductor (NVTS) shares have surged 90.3% over the past three months, significantly outperforming the Zacks Electronics - Semiconductors industry's growth of 14.9% [1][8] - The company's focus on power chips for AI data centers and cost-efficient manufacturing has generated optimism regarding its growth prospects [2][5] - The stock's performance raises questions about its future potential and whether investors should consider taking profits [2] Market Opportunity - Navitas Semiconductor is targeting the growing power needs of AI data centers, with power demand projected to increase from 7 gigawatts in 2023 to over 70 gigawatts by 2030 [5][9] - The shift to 800-volt architectures for data centers, as announced by NVIDIA, is expected to create significant demand for advanced power chips made from gallium nitride (GaN) and silicon carbide (SiC) [6][12] - The company estimates that the market for these chips could reach $2.6 billion annually by 2030, with plans to develop products for all stages of the new 800-volt setup [7][9] Production and Cost Efficiency - Navitas Semiconductor is transitioning its GaN chip production from 6-inch to 8-inch wafers in collaboration with Powerchip, aiming to produce 80% more chips at lower costs [11][14] - The new 8-inch platform is expected to enhance efficiency and margin gains, supporting the company's long-term growth strategy [11][14] - The production of high-voltage GaN chips is set to begin in 2026, with samples expected to be sent to customers later this year [12][13] Financial Performance and Estimates - The Zacks Consensus Estimate for NVTS' revenues in 2026 is $66.68 million, reflecting a year-over-year growth of 23.2% [9][10] - Current revenue estimates indicate a decline due to tariff risks in China, but long-term growth is anticipated as AI data centers expand [9][20] Valuation - Navitas Semiconductor is currently trading at a higher price-to-sales (P/S) ratio of 33.21X compared to the industry average of 8.81X [15][18] - The company's P/S multiple is also higher than that of peers such as Lam Research, Marvell Technology, and Ambarella, which have P/S multiples ranging from 8.49X to 8.61X [15][18] Conclusion - Navitas Semiconductor is well-positioned to benefit from the rapid growth of AI data centers, with its GaN and SiC chips suited for high-voltage systems [19] - The shift to 8-inch wafer production is expected to improve cost efficiency and margins over time [19][20] - Despite near-term challenges, the company's focus on the AI data center boom supports its long-term potential, making it an attractive long-term hold [20]

Core Insights - Wolfspeed, a leading manufacturer of silicon carbide (SiC) and gallium nitride (GaN) chips, filed for bankruptcy protection on June 30 due to stalled sales, widening losses, and increasing debt levels, with its stock closing at a record low of $0.39 [1] - On September 29, Wolfspeed emerged from Chapter 11 bankruptcy after reducing its total debt by approximately 70%, extending maturities to 2030, and cutting annual cash interest expenses by roughly 60%, with its stock trading at about $23, representing a significant recovery for investors [2] Company Overview - Wolfspeed specializes in SiC and GaN chips that can operate at higher voltages, temperatures, and frequencies than traditional silicon chips, making them suitable for applications such as LEDs, lasers, 5G base stations, military radars, solar panels, wind turbines, and electric vehicles (EVs) [4] - Unlike other "fabless" chipmakers, Wolfspeed is an integrated device manufacturer (IDM) that produces its chips and power devices in its own foundries, focusing on SiC wafers, SiC power devices, and GaN radio frequency (RF) and power devices [5] Production and Growth Strategy - To increase production of its latest SiC and GaN chips, Wolfspeed opened a new 200mm plant in Mohawk Valley, New York in 2022 and is constructing a larger 200mm plant in Siler City, North Carolina in 2023, while gradually phasing out older 150mm chip production in Texas and North Carolina [6] - From fiscal 2021 to 2025, Wolfspeed's revenue grew at a compound annual growth rate (CAGR) of 9.6%, increasing from $526 million to $758 million, primarily benefiting from a shift towards wide-bandgap (WBG) SiC and GaN chips in various markets [7] Challenges and Future Outlook - Despite emerging from bankruptcy and restructuring, Wolfspeed faces long-term challenges, including a deceleration in revenue growth and declining adjusted gross margins over the past three years [8][9] - The new CEO expresses optimism about the company's growth potential across multiple markets, although the stock is perceived as cheap, indicating potential investment opportunities [9]

Core Viewpoint - Navitas Semiconductor's stock has surged significantly due to its partnership with Nvidia, which positions the company to play a crucial role in the development of next-generation data centers expected to launch in 2027 [2][5]. Group 1: Stock Performance - Shares in Navitas Semiconductor increased by 28.4% in June and are up more than 80% year to date [1]. Group 2: Partnership and Technology - The partnership with Nvidia is pivotal for Navitas, as it will contribute to the architecture of new data centers that will be more efficient and reliable [2][3]. - Navitas' GaN chips will convert 800-volt HVDC to lower voltages for Nvidia's graphics processing units, while its SiC chips will convert 13.8 kilovolt AC power from the grid to 800-volt HVDC [4]. Group 3: Market Demand - There is optimism regarding ongoing capital spending on data centers and demand from AI applications, with major companies like Microsoft and Alphabet continuing their investment plans despite trade tariff conflicts [6]. - Anecdotal evidence suggests that investment in data centers remains strong [7]. Group 4: Future Outlook - Navitas is expected to experience aggressive sales growth in 2026, leading up to the launch of the new data centers in 2027, with Nvidia's progress on its architecture being a key driver for the stock price [9].