Why Navitas Semiconductor Stock Is Surging Today

Navitas Semiconductor (NASDAQ: NVTS) stock is seeing big gains in Monday's trading. The chip specialist's share price was up 11.3% as of 2:15 p.m. ET. Meanwhile, the S&P 500 index was up 0.5%, and the Nasdaq Composite index was up 1%.

The broader market is rallying today, and the semiconductor industry is seeing particularly strong gains thanks to news that bodes well for Nvidia and other players in the artificial intelligence (AI) space. In addition to bullish industry momentum, Navitas stock is also getting a boost thanks to excitement surrounding the company's participation in this year's CES conference.

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Navitas soars on semiconductor rally and CES excitement

Before the market opened this morning, Foxconn published its fourth-quarter financial results and delivered some bullish news for AI investors. The tech manufacturing company reported record Q4 revenue, and strong demand for artificial intelligence server products was a major performance catalyst. Nvidia is a key Foxconn customer and is seeing share price gains today in conjunction with indications that the demand backdrop in the AI hardware infrastructure market continues to be very favorable. Other AI players and chip stocks are also benefiting from the news, and Navitas is among the companies that are seeing valuation tailwinds today.

Investors are also bidding up Navitas stock in anticipation of what the company might have to show at this year's CES. The conference, which kicks off with a keynote by Nvidia CEO Jensen Huang tonight at 9:30 p.m. ET, is one of the world's most high-profile technology expos and frequently plays host to major product debuts and demonstrations. Navitas has already said that it will be showcasing its latest chips and AI power system reference designs at the trade show.

What comes next for Navitas?

Navitas stock has seen an impressive rally recently, with the company's share price climbing roughly 82% over the last three months. On the other hand, the stock is also still down 36% over the last year.

On the heels of recent gains, the company has a market capitalization of roughly $820 million and is valued at approximately 9.2 times this year's expected sales. Despite the growth-dependent valuation, Navitas' sales actually fell 1.4% year over year to $21.7 million in the third quarter. If the company can deliver wins with new products that power growth and deliver payoffs for the business's relatively high operating costs, shares could soar above current levels. But investors should move forward with the understanding that the stock is a speculative play that comes with a relatively high level of risk.

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Keith Noonan 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.