Why Nvidia-Backed Navitas Semiconductor Soared Today

Shares of Navitas Semiconductor (NASDAQ: NVTS) surged higher on Tuesday, finishing the day up 11%. The gain came as the S&P 500 (SNPINDEX: ^GSPC) and the Nasdaq Composite (NASDAQINDEX: ^IXIC) were both up 0.6%.

Positive news from ongoing trade talks between the U.S. and China is helping boost the company's stock as it continues its massive run-up following the revelation of its partnership with Nvidia.

U.S. and China trade talks continue

U.S. and Chinese officials are in London attempting to reach a more permanent resolution to the trade war that was put on pause last month. Commerce Secretary Howard Lutnick said on Tuesday that the discussions were "going well" and that the representatives were "spending lots of time together" attempting to reach a deal.

A permanent reduction of the massive tariffs both countries imposed on each other in recent months would be great news for the entire economy, but semiconductor companies could benefit specifically, depending on the details.

Image source: Getty Images.

A critical partner

Navitas announced last month that Nvidia had selected the company to help power its next-generation artificial intelligence (AI) data center systems, including the much-anticipated Rubin chips that will eventually succeed the current industry-leading Blackwell chips.

Navitas, which specializes in gallium nitride (GaN) and silicon carbide (SiC) technologies, will help Nvidia solve key scaling issues with its power supply for the incredibly powerful AI-fueled chips.

I think Navitas stock is worth owning; the seal of approval from Nvidia is huge. The company's balance sheet is solid, with minimal debt.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.