Last Update 17 Dec 25

NVTS: 800VDC Data Center Promise Will Face Elevated Multiples And Easing Gallium Risks

Analysts have raised their price target on Navitas Semiconductor from $8 to $12 per share, reflecting increased conviction in the long term potential of 800VDC data center architectures, even as they caution that current valuations may overestimate how quickly this market will inflect.

Analyst Commentary

Bullish Takeaways

Bullish analysts highlight that raising the price target to $12 signals increased confidence in Navitas capturing a meaningful share of emerging 800VDC data center demand.
The higher target reflects a belief that Navitas can execute on its roadmap and translate early design wins into accelerating revenue growth over the next several years.
Supporters argue that premium valuation multiples are justified by the company’s positioning in a structurally growing market segment, with potential upside if adoption timelines are accelerated.
Optimistic views also point to the company’s technology differentiation as a key driver of long term margin expansion and operating leverage as volumes scale.

Bearish Takeaways

Bearish analysts caution that, at roughly 60 times consensus FY26 revenue, the current valuation already reflects expectations of a rapid and smooth ramp of 800VDC architectures that may prove optimistic.
There is concern that investor patience could wear thin if revenue inflection in the data center market takes longer than the roughly two year window currently embedded in expectations.
Skeptics warn that any execution missteps, delays in customer qualifications, or slower than expected adoption could trigger multiple compression from today’s elevated levels.
More cautious views emphasize that, despite strong long term potential, the risk reward looks less compelling in the near term given the gap between current fundamentals and the growth implied by the share price.

What's in the News

China suspended for one year its export controls on several critical minerals, including gallium and germanium. This eases near-term supply risk for raw materials used in GaN production that involve Navitas as a gallium producer peer group member (The New York Times).
Navitas expanded its global distribution agreement with Avnet and consolidated franchised partners to broaden access to its GaN and SiC power devices for AI data centers, high performance computing, renewable energy, and industrial electrification customers.
The company announced sample availability of new 2300V and 3300V ultra high voltage SiC products and introduced an AEC Plus reliability benchmark that exceeds standard automotive and JEDEC qualification requirements for grid and energy infrastructure applications.
Navitas and GlobalFoundries entered a long term strategic manufacturing partnership to develop and scale U.S.-based GaN technology at GF’s Burlington, Vermont facility, targeting high power markets including AI data centers and grid infrastructure.
Navitas reported progress on 800 VDC GaN and SiC power devices designed to support NVIDIA’s next generation 800 VDC AI factory architecture, positioning the company directly in the emerging high voltage data center power transition.

Valuation Changes

Fair Value Estimate: Unchanged at $8.28 per share. This indicates no material revision to the intrinsic value assessment.
Discount Rate: Risen slightly from 10.42 percent to 10.46 percent. This reflects a modest increase in perceived risk or required return.
Revenue Growth: Effectively unchanged at approximately 26.29 percent long term. This signals stable expectations for top line expansion.
Net Profit Margin: Risen slightly from about 14.17 percent to 14.71 percent. This implies a modestly more optimistic view on future profitability.
Future P/E: Fallen slightly from roughly 181.4 times to 174.9 times. This suggests a small reduction in the multiple applied to forward earnings.

Projected growth in data centers and automotive sectors, supported by strategic partnerships and a robust backlog of design wins, boosts future revenue outlook.
Cost-reduction initiatives aim to improve net margins and support positive EBITDA, enhancing financial positioning for 2026.
Revenue and gross margin challenges, coupled with expense management and market softness, pose risks to long-term growth and innovation for Navitas Semiconductor.

Catalysts

About Navitas Semiconductor

Designs, develops, and markets power semiconductors in the United States, Europe, China, rest of Asia, and internationally.What are the underlying business or industry changes driving this perspective?

Navitas Semiconductor's GaN business experienced significant growth in 2024, with a 50% increase in revenues driven by strong demand in mobile, consumer appliances, and data centers. This upward trend is expected to continue, potentially boosting future revenues.
The company reported a $450 million backlog of design wins, expected to transition into revenue in the coming years. This high win rate provides increased visibility for future growth and is likely to positively impact revenue and earnings.
Navitas anticipates growth in the data center sector, with 40 customer project wins and a growing pipeline, supporting future revenue increases.
The expansion of Navitas' EV pipeline and design wins, including strategic partnerships with major automakers, is set to enhance revenue growth in the automotive sector as these projects enter production by 2026.
Cost-reduction initiatives, including workforce reductions and operational efficiencies, are projected to reduce operating expenses, ultimately favoring improved net margins and positioning for positive EBITDA in 2026.

Navitas Semiconductor Earnings and Revenue Growth

Navitas Semiconductor Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Navitas Semiconductor's revenue will grow by 23.9% annually over the next 3 years.
Analysts are not forecasting that Navitas Semiconductor will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Navitas Semiconductor's profit margin will increase from -182.6% to the average US Semiconductor industry of 14.1% in 3 years.
If Navitas Semiconductor's profit margin were to converge on the industry average, you could expect earnings to reach $18.3 million (and earnings per share of $0.07) by about September 2028, up from $-124.5 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 128.1x on those 2028 earnings, up from -9.8x today. This future PE is greater than the current PE for the US Semiconductor industry at 30.1x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 10.08%, as per the Simply Wall St company report.

Navitas Semiconductor Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company's revenue in the fourth quarter was within guidance but showed a sequential decline, particularly in the mobile and consumer markets, and a year-over-year decline in EV, solar, and industrial markets, indicating potential ongoing revenue challenges.
Gross margins have slightly decreased compared to the previous year, attributed to a less favorable market mix, which could impact the company's net margins negatively.
A significant one-time expense occurred due to disengaging with a silicon carbide distributor, leading to an $11.6 million expense, which affected net earnings.
The company plans to cut operating expenses through workforce reductions and synergies from prior acquisitions, which might limit growth and R&D efforts in new opportunities, potentially affecting long-term earnings and innovation.
Despite design wins and an expanding customer pipeline, the company anticipates continued softness and inventory corrections in key markets such as solar, EV, and industrial into the first half of 2025, posing ongoing risks to revenue recovery and growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $6.738 for Navitas Semiconductor based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $8.0, and the most bearish reporting a price target of just $4.4.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $129.8 million, earnings will come to $18.3 million, and it would be trading on a PE ratio of 128.1x, assuming you use a discount rate of 10.1%.
Given the current share price of $5.73, the analyst price target of $6.74 is 15.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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