The niche chipmaker still faces tough near-term headwinds.Navitas Semiconductor's (NVTS 4.36%) stock has experienced significant fluctuations over the past year. In April, the chipmaker's stock hit a record low of $1.52 per share. That marked a decline of more than 90% from its record high of $20.16 in November 2021.Yet Navitas' stock currently trades at around $9. Most of that rally was driven by its new data center deal with Nvidia (NVDA 2.42%) this May, but is its stock still worth buying right now? What ...

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].

Group 1 - Navitas Semiconductor's stock fell to an all-time low of $1.52 per share in April, representing a 92% decline from its peak of $20.16 in November 2021 due to missing long-term forecasts [1] - Before going public, Navitas projected revenue growth from $12 million in 2020 to $308 million in 2024, but actual revenue in 2024 was only $83 million [2] - Currently, Navitas' stock trades around $6, having increased significantly over the past five months following a new data center deal with Nvidia [3] Group 2 - Navitas specializes in producing gallium nitride (GaN) and silicon carbide (SiC) power chips, which are more efficient and durable than traditional silicon chips, making them ideal for various applications including EV chargers and data centers [4] - The company generates most of its revenue from GaNFast Power ICs and expanded its SiC market presence through the acquisition of GeneSiC in 2022 [5] - Key customers include major PC manufacturers like Dell and Lenovo, smartphone companies such as Samsung and Xiaomi, and Chinese EV makers like BYD and Changan [6] Group 3 - Navitas experienced sales growth in 2022 and 2023, but this growth has stalled in 2024 due to the dissolution of a partnership with a key distributor and declining orders from its EV, solar, and industrial customers [7] - Sales in China, which accounted for 60% of revenue in 2024, are subject to unpredictable tariffs, further impacting growth [7] - A new partnership with Nvidia may provide opportunities for future growth, but current valuations may already reflect much of this potential [8]

Core Viewpoint - Navitas Semiconductor, a producer of GaN and SiC chips, faces challenges in justifying its high valuations due to disappointing growth and profitability metrics since going public [2][10]. Company Overview - Navitas Semiconductor went public by merging with a SPAC on October 21, 2021, with its stock initially opening at $13, peaking at $22.19, and then dropping to an all-time low of $1.52 by April 4, 2025 [2]. - The company's stock currently trades just above $7, buoyed by a new partnership with Nvidia for AI data centers [3]. Product and Market Position - Navitas specializes in GaNFast Power ICs, which integrate multiple features into a single chip, and has expanded into the SiC market through the acquisition of GeneSiC in 2022 [4]. - Major customers include Dell Technologies, Changan, and Nvidia, which utilize Navitas' chips in various applications such as laptop chargers and EV chargers [4]. Financial Performance - Revenue figures for Navitas show significant growth in 2022 and 2023, but a slowdown in 2024, with revenues of $37.9 million in 2022, $79.5 million in 2023, and projected $83.3 million in 2024 [7]. - Adjusted EBITDA has remained negative, with figures of ($32.9 million) in 2022, ($19.3 million) in 2023, and ($27.8 million) in 2024, indicating ongoing profitability challenges [7]. Future Outlook - Analysts expect Navitas' revenue to grow at a CAGR of 7% from 2024 to 2027, but adjusted EBITDA is projected to remain negative [9]. - The partnership with Nvidia is anticipated to significantly boost revenue, although tariffs against China and a strategic retreat from lower-margin markets may hinder growth [8]. Valuation Concerns - Navitas' enterprise value stands at $1.27 billion, translating to 26 times this year's sales, raising concerns about inflated valuations driven by speculative investor interest [9][10]. - If the company meets analysts' expectations, its stock price could decline to approximately $6.10 by 2028, indicating potential underperformance until core business stabilization occurs [11].