Up 373%, This Nvidia-Backed Chip Stock Is Only Just Getting Started

Powering Up the Future of Data Centers

Nvidia‘s (NASDAQ:NVDA) next-generation 800V high-voltage direct current (HVDC) architecture is set to transform data center power delivery, addressing the escalating demands of AI-driven workloads. 

Unlike the traditional 54V DC systems, which struggle with bulky copper busbars and efficiency losses at gigawatt-scale power needs, the 800V HVDC design streamlines energy distribution. By converting 13.8 kilovolt (kV) AC grid power to 800V DC at the data center perimeter, it eliminates multiple conversion stages, reducing copper usage by up to 45% and boosting end-to-end efficiency by 5%. This architecture supports IT racks 1 megawatt or larger, critical for next-gen GPUs, while cutting maintenance costs by 70% and lowering cooling requirements. 

Set for full-scale production in 2027, this innovation promises scalability, reliability, and sustainability, revolutionizing how AI factories power their compute-intensive operations. 

Amid this shift, a lesser-known chipmaker, Navitas Semiconductor (NASDAQ:NVTS), has emerged as a key player. Thrust into the spotlight through a strategic partnership with Nvidia, Navitas’ advanced technologies are integral to achieving this power supply upgrade, positioning it for significant growth in the evolving data center landscape.

Navitas’ Surge and the 800V HVDC Revolution

Navitas Semiconductor is a small-cap chipmaker specializing in gallium nitride (GaN) and silicon carbide (SiC) power semiconductors. Its stock has soared approximately 250% since it announced a partnership with Nvidia in May to develop the 800V HVDC architecture for AI data centers.

Trading at around $7.19 per share, NVTS stock is 373% above its 52-week low of $1.52, reflecting investor enthusiasm for its role in Nvidia’s ‘Kyber’ rack-scale systems powering GPUs like the Rubin Ultra. Despite this rally, Navitas has room to run, driven by its technological edge and the growing AI power bottleneck. Its GaNFast and GeneSiC technologies enable high-efficiency, high-frequency power conversion, critical for 800V HVDC’s efficiency gains and copper reduction. 

With 2024 revenue of $83.3 million and losses of similar magnitude, Navitas’ path to profitability hinges on scaling design wins, but its 300-plus patents and production-ready 8.5 kilowatt (kW) and 12kW power supplies signal readiness for the $13 billion power semiconductor market by 2026. Navitas could become the “unsung hero” in AI infrastructure.

Upending a Dynamic Power Market

However, Navitas faces competition from companies independently pursuing advanced power solutions for AI data centers. Infineon Technologies and Texas Instruments (NYSE:TXN), also collaborating with Nvidia, offer GaN and SiC solutions, leveraging larger scale and established client bases. Infineon is the largest microcontroller manufacturer in the world and Germany’s largest chipmaker.

STMicroelectronics (NYSE:STM)  and ROHM Semiconductor (OTC:ROHCY) are developing similar high-efficiency semiconductors, targeting the same AI and EV markets. These competitors, while not pure-play GaN/SiC like Navitas, pose risks due to their broader portfolios and financial stability. 

On the other hand, the shift from 54V DC to 800V HVDC systems threatens to displace companies reliant on legacy power architectures. Firms like Delta Electronics and LiteOn, which supply traditional 54V power system components, may face obsolescence as 800V HVDC simplifies infrastructure and reduces conversion stages. Eaton (NYSE:ETN) and Schneider Electric (OTC:SBGSY) — focused on conventional data center power systems — could also lose market share unless they adapt to the new standard by 2027.

Key Takeaway

With a $1.38 billion market valuation, Wall Street has been warming up to Navitas’ potential, but they think it has come too far, too fast. Although five of the eight analysts covering the chipmaker rate the stock a buy or better, their consensus one-year price target of $3.71 per share suggests it is grossly overvalued.

More recently Deutsche Bank downgraded its rating on NVTS to hold and cut its price target in half to $3.50 per share. Navitas’ high 21.1% short interest also suggests potential volatility, but its Nvidia-backed validation and focus on AI and EV power efficiency provide upside potential.

If Navitas  Semiconductor secures additional contracts and ramps production, it could mirror the growth of other Nvidia ecosystem players. That makes NVTS stock a compelling speculative investment despite competitive and financial risks.