Why Navitas Soared 20% Today

Shares of Navitas Semiconductor Corp. (NASDAQ: NVTS) rallied 22.3% on Thursday, as of 3:00 p.m. ET.

Navitas is a small-cap chip designer that specializes in power-efficient designs for electric vehicles, electric infrastructure, and artificial intelligence (AI) data centers.

With the severe slowdown in EV and electrical infrastructure spending this year, Navitas' stock had been hurt. However, some new product announcements on Thursday caused shares to bounce back big.

New products for CES

On Thursday, Navitas put out a press release listing all the new chipsets it would debut at the Consumer Electronics Show (CES) that takes place in Las Vegas every January. CES is a big industry event where virtually all tech companies show off their latest and greatest gadgets.

The list of new Navitas products includes various chipsets made of gallium nitride (GaN) and silicon carbide (SiC), which are novel materials with high conductivity and heat dissipation qualities. Thus, these expensive materials generate lots of savings in power- and heat-intensive applications like electric vehicles, infrastructure, and power-hungry AI data centers.

It's a bit difficult to know exactly which product might have generated such enthusiasm for the stock today, but the release did highlight a few products specifically geared toward AI data centers. Artificial intelligence stocks, especially off-the-radar small-caps that serve AI, have risen a lot in the past few days, so Navitas appears to be lumped in with that cohort of speculative AI bets.

Think twice before chasing

While today's rally was nice, recent buying in smaller AI stocks seems like speculation, which could be dangerous. Navitas only reported $21.6 million in revenue last quarter with a $29 million operating loss, and actually guided for revenues to be down sequentially in the fourth quarter.

While these new products may turn the ship around, investors should wait to see an actual upturn in results before chasing this rally.

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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.