Here's Why Shares in Navitas Powered Higher Again This Week

Shares in Navitas Semiconductor (NASDAQ: NVTS) rose by almost 29% in the week to Thursday afternoon. The move comes as investors continue to digest the news that Nvidia is collaborating with Navitas to develop data center architecture for the next generation of data centers, due to launch in 2027.

Why Navitas stock keeps rising

There's no doubt that the Nvidia connection is fueling the stock price appreciation this year. However, there is still a long way to go before Navitas develops solutions to work in next-generation 800-volt (V) high-voltage direct current (HVDC) data centers being developed to handle the surge in demand from artificial intelligence (AI) applications and high-performance computing.

For the sake of brevity, it's challenging to go into too much detail on them here. Suffice to note that Nvidia believes they will be 5% more efficient and cut maintenance costs by 70%, while lowering cooling costs.

A recent Navitas presentation

Navitas CEO Gene Sheridan discussed the matter this week at a Rosenblatt Securities Summit and said that the power efficiency of older 12V data centers using silicon technology was about 70%, with newer 48V data centers using gallium nitride and silicon carbide (Navitas' focus) the efficiency went up into the 80s, but with the new 800V data centers it can get into the 90s. They may sound like small gains, but they are a significant reduction in costs and power requirements.

Image source: Getty Images.

That would be a significant plus and help support Sheridan's belief that Navitas' total addressable market stands at "hundreds of millions of dollars headed to $1 billion over the coming years." It's that kind of potential that's encouraging speculative investors into the stock this week.

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Lee Samaha 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.