Navitas Semiconductor’s Turnaround Story Hits a Speed Bump as AI Pivot Gains Traction

Navitas Semiconductor reports mixed Q1 2026 results: sequential revenue growth of 18% but a 39% year-over-year decline, as the company pivots to GaN and SiC for AI data centers amid widening losses.

Navitas Semiconductor delivered a mixed bag of results for the first quarter of 2026, with sequential revenue growth masking a steep year-over-year decline that has left investors questioning the pace of the company’s strategic overhaul. The stock initially jumped more than 10 percent in after-hours trading following the earnings release, only to give back those gains and then some, falling roughly 9 percent to around $16 on May 6.

The disconnect between the headline numbers and the market’s reaction highlights the tension at the heart of Navitas’ transformation. The company is deliberately shedding its low-margin mobile and consumer businesses in favor of high-performance gallium nitride and silicon carbide solutions for AI data centers and industrial applications — a strategy internally dubbed “Navitas 2.0.” But the financial pain of that pivot is showing up in the bottom line.

Revenue Climbs Sequentially but Plunges Year Over Year

First-quarter revenue came in at $8.6 million, representing an 18 percent sequential increase from the prior quarter. That figure also beat analyst consensus by roughly 3 percent. However, compared to the $14.0 million Navitas generated in the same period a year earlier, revenue has cratered by 39 percent. The drop is not a sign of market weakness but rather a direct consequence of the company’s deliberate retreat from consumer-facing markets.

The bright spot lies in the high-power segment, which grew approximately 35 percent year over year and now accounts for the majority of Navitas’ top line. This division focuses on GaN and SiC chips designed for power-hungry AI data centers and industrial equipment — markets where Navitas believes it can command premium pricing and healthier margins.

Losses Widen as R&D Spending Intensifies

The GAAP net loss expanded to $33.8 million, or $0.15 per share, more than doubling the $16.8 million loss recorded in the first quarter of 2025. On a non-GAAP basis, the loss was a narrower $0.04 per share, beating analyst expectations. The operating loss stood at $27.8 million, while stock-based compensation added $10.3 million to the cost structure.

The non-GAAP gross margin edged up to 39.0 percent, a modest improvement that reflects the shift toward higher-value products. But the company continues to burn cash aggressively as it invests in next-generation technology, including 2.3-kV and 3.3-kV GaN modules and a 250-kW solid-state transformer developed in partnership with the EPFL. That transformer, demonstrated at APEC 2026, targets 800-volt DC distribution in AI data centers and represents a potential breakthrough for Navitas’ SiC portfolio.

Cash burn in the first quarter totaled roughly $15.9 million, but the company maintains a healthy balance sheet with $221 million in cash and zero debt. CFO Tonya Stevens described the reserves as sufficient to support a long investment horizon, giving management breathing room as the transformation plays out.

Guidance Beats Estimates, but Skepticism Lingers

For the second quarter, Navitas guided for revenue between $9.5 million and $10.5 million, with the midpoint of $10 million representing sequential growth of about 16 percent. That forecast significantly overshoots the analyst consensus of $9.1 million. The non-GAAP gross margin is expected to tick up to roughly 39.25 percent.

Despite the upbeat outlook, analysts remain divided. Morgan Stanley raised its price target from $4.20 to $12.50 but maintained an “Underweight” rating, acknowledging the potential of GaN and SiC in AI applications while flagging valuation and execution risk as persistent concerns. The stock trades at an elevated price-to-sales multiple, making it vulnerable to profit-taking whenever the narrative wobbles.

Stevens expects the high-power segment to gradually boost revenue through the remainder of the year, but the path to profitability remains uncertain. For now, Navitas is betting that its technology will find a home in the data centers powering the AI boom — a wager that has yet to translate into the kind of scale that would justify the current market valuation.