Navitas Semiconductor (NVTS) saw its shares tumble 14.5% to $18.30 on Wednesday, as a broad selloff in chip stocks and mounting concerns over elevated valuations in the AI sector weighed heavily on investor sentiment. The stock opened at $21.02 before sliding to a session low of $18.26, with trading volume surging to 17.6 million shares.
The Philadelphia SE Semiconductor Index fell 7.9% on Tuesday, dragged lower by worries that massive spending on artificial intelligence may not deliver the expected returns. The broader market also felt the pressure, with the Nasdaq and S&P 500 closing at their lowest levels in over a week, according to Reuters. Thomas Martin, senior portfolio manager at Globalt, noted that the latest AI headlines "raises questions about all the spending."
Zacks Research highlighted the steep valuation of Navitas, noting that the stock trades at roughly 97 times forward sales, compared to the industry average of just 10 times. The firm assigned Navitas a Zacks Rank #4, or Sell, and pointed out that consensus estimates call for losses in both 2026 and 2027. Despite these headwinds, Navitas shares have surged 232% year-to-date, far outpacing the industry's 66% gain.
The company, which specializes in power semiconductors using gallium nitride (GaN) and silicon carbide (SiC) materials, targets high-growth markets such as AI data centers, energy systems, performance computing, and industrial electrification. On June 3, Navitas showcased its 800-volt to 6-volt DC power delivery board at NVIDIA's AI Factory MGX Ecosystem event at COMPUTEX 2026 in Taipei. The board, which uses 16 GaNFast field-effect transistors, is designed for 97.5% peak efficiency. CEO Chris Allexandre emphasized that "power delivery has become one of the most critical challenges" for next-generation AI factories.
Adding to the pressure on the stock, Navitas filed an at-the-market equity program on June 8, authorizing the sale of up to $500 million in shares over time through brokers. The filing warned that selling shares, or even the potential for such sales, could depress the stock price and cause immediate dilution for new buyers. This dilution risk has become a key concern for investors already wary of the company's high valuation.
In the first quarter, Navitas reported revenue of $8.6 million, an 18% sequential increase, but a GAAP operating loss of $27.8 million. The company guided for second-quarter revenue of approximately $10.0 million, plus or minus $0.5 million. CEO Allexandre described the quarter as "a return to top-line sequential growth," while CFO Tonya Stevens pointed to "strong momentum" in high-power markets. Zacks also noted that Navitas's energy and grid segment could represent a $1 billion to $1.8 billion serviceable market by 2030.
Other power and silicon-carbide chip stocks also experienced mixed performance, with Wolfspeed falling 7.5% and ON Semiconductor declining 2.0%, while Power Integrations edged up 0.3%. The broader chip selloff reflects growing skepticism about whether the massive investments in AI infrastructure will translate into sustainable revenue growth for smaller players like Navitas.
