Navitas Semiconductor's AI Bet Faces a Legal Test as Wolfspeed Patent Suit Accelerates Share Decline

Navitas reports Q2 earnings amid a 34% stock drop after Wolfspeed sues over GaN and SiC patents. AI revenue surges 50% sequentially, legal uncertainty looms.

Navitas Semiconductor heads into its second-quarter earnings report on July 27 with a promising narrative of AI-driven revenue momentum, but a patent infringement lawsuit filed by rival Wolfspeed has injected a fresh dose of legal uncertainty into the stock. The court action, brought on July 7 before the U.S. District Court in Delaware, alleges that Navitas violates five patents covering gallium-nitride and silicon-carbide semiconductors — the very technologies underpinning its growth strategy. Shares have tumbled more than 34% in the past month, closing at €11.70 on Friday, a 6.4% daily loss that extended the weekly retreat to 10.7%.

Wolfspeed's complaint targets five product families: the GaNFast, GaNSlim, and GaNSafe lines of GaN transistors, along with GeneSiC silicon-carbide MOSFETs and SiCPAK power modules. The company is seeking a permanent injunction to halt sales and imports of those products into the U.S., as well as monetary damages. Navitas responded the following day, dismissing the allegations as baseless and vowing to mount a vigorous defense. The company characterized the lawsuit as an attempt by Wolfspeed to gain through litigation what it cannot achieve in the marketplace.

The legal battle comes at a time when Navitas's underlying business is showing signs of life in the most lucrative segments. First-quarter revenue of $8.6 million represented a 38.6% decline from a year earlier, yet sequentially sales improved 18%, driven by a 50% surge in AI infrastructure revenue. The non-GAAP net loss stood at $9.8 million. For the second quarter, management guided for revenue around $10 million. That improvement reflects early commercial traction: Navitas recently secured a supply contract for its GaNFast and GeneSiC chips used in 800-volt architectures for AI data centers, and counts Nvidia as a partner in the same power-conversion technology. The addressable market for that 800V DC architecture is estimated at $3.5 billion by 2030.

On the product development front, Navitas launched a 20-kilowatt GaN platform for converting 800V to 6V and introduced Gen-5 SiC products targeting AI power supplies. Several projects have reached the testing stage with manufacturers and are approaching commercial production. These advances underpin the company's conviction that its proprietary GaN and SiC expertise will win out in the long run.

Investors, however, are focused on the present, and the market data reflects deep strain. The stock trades 59.9% below its 52-week high of €29.20 reached on May 26, and sits 37% beneath its 50-day moving average of €18.58. The relative strength index of 33.7 points to oversold conditions, while the annualized 30-day volatility of 121% underscores the jitters. The market capitalization stands at roughly €3.02 billion. On Wall Street, the U.S.-listed shares shed 8.14% on the day the lawsuit was filed and another 4.5% the following session, bringing the five-day loss to as much as 14.2%.

Analysts have largely held their ground: the consensus rating is "Hold" with an average price target of $13.97, not far above the current equivalent. The next major catalyst arrives after the July 27 close, when CEO Chris Allexandre and CFO Tonya Stevens will discuss second-quarter results and the outlook. For a company that has touted AI data centers as its path to profitability, the challenge is to convince the market that operational momentum can outrun the legal cloud — and that the Wolfspeed lawsuit will not derail a recovery that, by the numbers, is still in its early stages.