Navitas Semiconductor stock is now 'overbought': but should you sell?

Navitas Semiconductor (NASDAQ: NVTS) is pushing meaningfully higher on April 21^st amidst a convergence of strategic “Navitas 2.0” milestones and heightened retail enthusiasm for artificial intelligence (AI) infrastructure.

The upward momentum drove NVTS’s relative strength index (RSI) into the early 80s – indicating “overbought” conditions that often precede a meaningful pullback.

Including today’s surge, Navitas Semiconductor's stock has more than doubled in April.

AI power catalyst continues to drive Navitas stock higher

NVTS shares have been in a strong uptrend primarily because of investor conviction that the firm’s gallium nitride (GaN) and silicon carbide (SiC) tech is essential for AI data centers.

As artificial intelligence workloads scale, traditional silicon chips struggle with power efficiency.

Navitas recently demonstrated a new 800V-to-6V DC-DC power delivery board designed for next-gen AI server racks (like those used for Nvidia’s newest architectures).

This has repositioned the company as a critical “pick-and-shovel” play in the global AI buildout.

High-power market pivot is sitting well with investors

Investors are reacting to recent data showing that high-power end markets (AI, grid infrastructure, and industrial) now make up more than half of NVTS’s total revenue.

This shift away from lower-margin mobile charging (now under 25%) suggests the Nasdaq-listed firm is successfully pivoting to more lucrative, high-growth industrial sectors.

Moreover, the market is still digesting the recent appointment of Gregory M. Fischer as a director.

As a 40-year industry veteran and former SVP at Broadcom Inc, his addition is viewed as a major endorsement of Navitas’ ability to execute its “high-power strategy” and scale operations to meet enterprise demand.

NVTS shares rip higher on a technical squeeze

With short interest estimated at 25% of the float, today’s rapid ascent likely triggered a short squeeze as well.

As Navitas Semiconductor shares gapped up and broke above previous resistance levels, short sellers were forced to cover their positions – further accelerating the upward momentum on Tuesday.

Note that the recent surge in NVTS arrives only weeks before the company is scheduled to report its Q1 earnings. Consensus is for it to lose 6 cents on a per-share basis, which would mean a 40% improvement over last year.

Traders appear to be positioning themselves ahead of the quarterly release – betting on a “positive update” on the firm’s $3.5 billion addressable market roadmap for 2030.

How to play Navitas Semiconductor at current levels?

Beyond the aforementioned fundamental and technical drivers, options pricing remains skewed to the upside as well.

According to Barchart, the put-to-call ratio on contracts expiring mid-September sits at 0.23 only, indicating bullish sentiment continues to dominate the derivatives market.

And the upper price of over $23 on those contracts signals potential for a more than 45% rally in NVTS stock within the next five months.