Navitas Grew 38% by Shrinking Its Way Into AI Data Center Power

Most semiconductor turnarounds look like desperate expansion. Navitas did the opposite: it cut off its own limbs on purpose. Across 2025 and 2026, the company systematically abandoned the cheap mobile charging market that once made up the bulk of its business, retooling every bench toward artificial intelligence.

Navitas designs power chips. Instead of processing logic like an accelerator chip does, these semiconductors take raw electricity from a wall socket or grid and step it down into the exact current silicon requires. Gallium nitride, or GaN, is the compound that shrank your everyday phone charger from an unwieldy brick into a pocket-sized pebble. Silicon carbide, or SiC, does the same heavy lifting at thousands of volts. Navitas creates the blueprints, lets foundries like TSMC and GlobalFoundries build them, and sells the silicon to power-supply vendors and hyperscale data center operators.

The company is effectively the electrical plumber of the AI buildout. Modern server racks are rapidly becoming multi-hundred-kilowatt machines. Try routing that much raw power at traditional low voltages and your copper busbars melt into slag under the electrical current.

To survive, data center operators are raising the internal voltage to 800 volts DC, only stepping the power down directly at the processor. Higher voltage means lower current, less heat, and far thinner wiring. Every step-down stage along that rack requires specialized switches. Navitas sells the chips that sit at those bottlenecks.

The deliberate downsizing is finally showing up in the numbers. Third-quarter revenue came in at $14.0 million, up 38% year over year and 33% sequentially. It was the company's first year-over-year growth since 2024. Adjusted gross margin reached 40.0%, while GAAP gross margin bounced to 21.5% as older acquisition intangibles finished amortizing. High-power systems revenue jumped 125% this year as mobile sales shrank toward low single digits. Navitas even cleared an adjusted loss per share of three cents, beating Wall Street targets.

For the stock to justify a durable re-rating, the market has to believe in 2027. Investors are not buying a $16 million quarter; they are front-running an architectural shift. Management expects AI infrastructure sales to roughly triple next year, underpinned by a book-to-bill ratio well above one and a backlog stretching into mid-2027. The company collaborated with Nvidia on an 800-volt-to-12-volt power board, while early 1.2-kilovolt silicon carbide supplies are already shipping to server builders. If those 800-volt sidecar racks ship in volume while corporate overhead sits still, operating margins will explode.

A short seller, however, would call this an expensive call option tethered to an unproven ramp. Only the first of management’s four celebrated inflections generates revenue today; the rest are backlogs, lab samples, and distant 2028 targets. The recently acquired Claros platform targets integrated voltage regulators directly beneath processor packaging, but its anchor customer will not ramp until late 2028 or 2029.

Meanwhile, the bill has already arrived. Fourth-quarter operating expenses are guided to jump roughly 51% to $25.0 million. Against roughly $6.5 million in gross profit, operating losses will widen sharply. The business has funded its runway by diluting shareholders, pushing share count up 25% over thirteen months with $244 million remaining on its equity facility. To make matters worse, Wolfspeed sued in July alleging patent infringement and seeking an injunction on GaN and SiC lines, while Renesas filed suit against the company and its chief executive over trade secrets.

A court injunction against core power lines would dismantle the thesis overnight.

Navitas does hold real cards. It carries roughly $405 million in pro forma cash, zero debt, and sole-sourced sockets on several upcoming high-voltage racks. Its stack connects grid transformers all the way down to motherboard sockets.

The entire story now pivots on operating discipline. What we are watching is whether fourth-quarter revenue lands near its $16.0 million target and if operating expenses stay flat through early 2027. If revenue scales at double digits while that overhead holds, the operating leverage is real. If expenses creep higher before server racks ship, the turnaround stays on the drawing board.

Disclosure: The Signal holds no position in NVTS. Positions may change. This is not financial advice.