Nvidia's AI chip company has seen its stock fall 51% in weeks due to a $125 million capital increase and its exclusion from the Russell indices. On Friday, it closed at €13.10 with a slight rebound of 3.15%.
Navitas Semiconductor, the manufacturer of power systems for Nvidia's artificial intelligence data centres, is experiencing its worst moment on the stock market. The share price has plummeted 51% in recent weeks, closing on Friday at €13.10, weighed down by a perfect storm of internal and external factors that have shattered investor confidence. The 3.15% rebound in the last session barely masks a week in which the stock lost 14.38%.
Capital Increase and Exclusion from Indices: The Perfect Storm
The trigger for the bloodbath was the board's decision to initiate a stock sale programme worth $125 million. Shortly thereafter, the company issued millions of additional shares to meet prior commitments, leading to immediate dilution for existing shareholders. According to company sources, the measure aims to finance a strategic transformation towards high-margin markets.
But the hardest blow came with Navitas's exclusion from the Russell indices, a decision that forced exchange-traded funds (ETFs) tracking those indices to liquidate their positions. Selling pressure intensified at a time when the semiconductor market was already under strain: the sector lost nearly $1.3 trillion in market capitalisation following disappointing revenue forecasts from Broadcom and a spike in the VIX, the fear index.
Adverse Macro and Sector Context
The macro environment has not been supportive either. The weak employment report in the United States—only 57,000 new jobs compared to the expected 115,000—keeps the alert on inflated valuations in the tech sector. Although the data opens the door to potential rate cuts, the rotation of capital towards defensive stocks has hit high-growth shares like Navitas hard. Bank of America's bubble risk indicator reached a level of 0.91 for the semiconductor industry, suggesting that the adjustment could still continue.
Operationally, the company is accelerating its strategic pivot. It is abandoning low-margin consumer markets to focus on AI data centres and the modernisation of electrical grids. Its alliance with Nvidia is key: it supplies power boards based on gallium nitride and silicon carbide for the MGX ecosystem, designed to contain the energy appetite of next-generation servers. The results from the last quarter reflect this shift: revenues reached $8.6 million, 18% more than in the previous period, driven by high-power segments.
Divided Analysts and Technical Support at Stake
Despite the operational improvement, analysts remain unconvinced. The consensus is to “hold,” and the average price target is set at €12.64, below Friday's close. Several experts doubt that the business can sustain itself in the short term, given that the company needs to manage its persistent capital requirements. Navitas aims for a total addressable market of $3.5 billion by 2030, but to achieve this, it must convince investors that its model is viable without new capital increases.
Technically, the stock is at a crossroads. It is trading exactly at its 100-day moving average, at €13.11, a level that could mark a turning point or a continuation of the decline. The 14-day RSI is at 34.6, nearing the oversold zone of 30, suggesting that selling pressure could be waning. However, the price remains 55% below its 52-week high—close to €30—and 29% below the 50-day average, at €18.45. The annualised volatility over 30 days reaches 118.7%, making Navitas as explosive as it is fragile.
For investors still holding positions, the question is whether this technical floor will hold. Those looking at the full annual range will see that the stock is still doubling February's low (€6.15), but the recent slope is dizzying. Next week, the chip market thermometer and macro movements will decide whether this support is solid or if the abyss opens again. Navitas shares are not for the faint-hearted, but those betting on AI in the long term may see an opportunity in the eye of the hurricane.
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