Navitas Semiconductor: CEO Transition Tests my Short Thesis Amid Persistent Tariff Risks

(This is an update to my short thesis on Navitas published on August 12, 2025)

Navitas Semiconductor (“Navitas”) has announced the abrupt resignation of founder and CEO Gene Sheridan on August 25. Industry veteran Chris Allexandre has been appointed to step in as the company’s new President and CEO effective September 1.

The leadership change comes at a critical juncture for Navitas, as management has just recently confirmed in its Q2 2025 earnings update a strategic pivot towards higher margin AI applications. Yet the latest CEO transition does not offer immediate resolution to Navitas’ mounting losses, which is at risk of being worsened by its imminent exposure to the 100% semiconductor tariffs tied to its manufacturing partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (“PSMC”) starting 1H26. As a result, my short thesis on Navitas – centered on the stock's overvaluation driven by its deteriorating margins and tariff-related cost pressures – remains intact despite the CEO transition news.

However, Allexandre’s extensive industry connections and expertise in power semiconductors does introduce long-term upside risks that warrant caution. In the below follow-up, I will evaluate the implications of Allexandre’s appointment to the role of Navitas CEO, highlighting potential opportunities that could challenge my bearish outlook on the stock while reaffirming near-term pressures from tariffs and fundamental weaknesses.

Recap of the Short Thesis

Navitas, a fabless Gallium nitride (“GaN”) and silicon carbide (“SiC”) power solutions provider, has seen its stock surge close to 80% year-to-date. It’s now trading at a lofty 32.4x 2025 sales following its non-exclusive partnership forged with Nvidia for the 800 Volt Data Center (“800 VDC”) architecture starting in 2027. This premium valuation far exceeds peers like Alpha and Omega Semiconductor (1.2x NTM P/S) and Monolithic Power Systems (13.7x NTM P/S), and ignores a critical downside catalyst – namely, Navitas’ impending exposure to 100% semiconductor tariffs on GaN wafers produced by Taiwan’s PSMC beginning 1H26.

With at least 11% of Navitas’ projected 2026 revenues (~$6.3 million of $57 million) tied to U.S. sales, these tariffs could add $6.3 million to its annual costs. This could erase the entirety of Navitas’ estimated $2 million U.S. gross profit next year (based on 37% GAAP gross margin in Q2 2025) and deepen its current losses.

The company also faces ongoing operational challenges. This includes expectations for steep revenue declines in 2H25, and a mere 1.6-year liquidity runway that’s poised to contract given Navitas’ upcoming exposure to additional semiconductor tariffs. Intensifying competition from larger integrated device manufacturers (“IDMs”) like Infineon and STMicroelectronics, coupled with protracted macro headwinds facing its core EV, solar and industrial end-markets, also threatens Navitas’ pricing power and pipeline conversion long-term.

As a result, the company remains exposed to threats of a 50% to 90% downside valuation reset. A correction to 13.7x NTM P/S (aligned with MPS’ profit-driven premium in the power semis peer group) implies a 50% downside to ~$3.10. A 7x NTM P/S (peer average, Navitas’ pre-Nvidia valuation) suggests a 74% downside to $1.60. In a worst-case scenario, mirroring unprofitable power semiconductor peers AOSL (1.2x NTM P/S) or Wolfspeed (1x NTM P/S), Navitas risks facing more than 90% downside to $0.27-$0.23, driven by its ballooning losses and dilution risks.

Allexandre’s Appointment: A Double-Edged Sword

Allexandre brings almost 28 years of sales and power semiconductor experience to Navitas, backed by his leadership roles at Renesas, NXP, Fairchild and Texas Instruments. His latest tenure as SVP and General Manager of Renesas’ Power division, alongside his oversight of the unit’s 2024 acquisition of GaN manufacturer Transphorm, aligns particularly with Navitas’ strategic penetration into AI opportunities long-term. Allexandre’s Board roles in TenXer Labs, Cyient Semiconductors, and Ambient Scientific also highlights a supportive network that could potentially further the application of Navitas’ GaN and SiC solutions across key AI, IoT and electrification verticals. While these credentials introduce opportunities for Navitas, they also pose risks to my short thesis on the stock, which necessitates a closer examination.

Implications for the Navitas Short Thesis

1. Persistent Tariff Exposure: The PSMC partnership remains Navitas’ Achilles’ heel, as U.S.-bound GaN wafers from the Taiwanese fab starting 1H26 will be subject to 100% semiconductor tariffs. Allexandre’s appointment does not immediately address this incremental cost headwind, which could deter prospective U.S. customers in AI verticals, reinforcing my thesis of imminent growth deteriorating and margin compression. This is poised to compound Navitas’ weak 2H25 revenue outlook and exacerbate the company’s ongoing losses, suggesting near-term financial strain that Allexandre’s appointment is unlikely to resolve.

2. Leadership Transition Uncertainty: Sheridan’s sudden and complete exit from the company – including the relinquishment of his Board seat – also raises concerns. Although he will stay with the company for another year to aid Allexandre’s transition into the CEO role, his abrupt departure and steep stock selling since the Nvidia partnership announcement in May signals potential misalignment with shareholder interests. As I’ve mentioned before – if Navitas is really in the early innings of AI infrastructure growth as management intends, then the substantial insider share selling (not just by Sheridan) since the Navitas-Nvidia collaboration announcement questions confidence in the opportunity’s scale.

Allexandre’s sudden appointment to the helm also introduces additional execution risks. Although his credentials and experiences are strong and relevant to Navitas’ pivot towards AI opportunities, his strategic vision for the company – which remains uncertain – could exacerbate near-term growth challenges, supporting my bearish outlook on the stock.

3. Strategic Pivot Risks: The Board’s optimism about Allexandre’s “track record of driving transformation and delivering sustainable and profitable growth, operational excellence and business leadership in power semiconductor markets” also overlooks the capital-intensive nature of Navitas’ AI pivot.

Allexandre was likely hired to further Navitas’ focus on emerging AI opportunities – a costly strategic pivot that’s already impacting its near-term growth profile. As I’ve discussed in the initial analysis, the company’s $161.2 million cash balance only provides about 1.6 years of liquidity runway, which is poised to contract with the incremental semiconductor tariffs. This means Allexandre’s first order of business would still be to improve Navitas’ AI-driven backlog and diversify its manufacturing.

But these endeavours will take time to materialize, triggering additional financing needs for the company before its AI-designated productions start to ramp in later 2026. And it’s unlikely the company will tap into debt financing, as it’d increase its exposure to additional interest expenses and, inadvertently, further margin erosion. This implies another equity issuance is potentially on the way. Although this could represent a prudent capitalization of the stock’s current valuation premium, it’d come at the expense of inevitable share dilution for investors.

Potential Pros of Allexandre’s Appointment

Although Allexandre’s appointment doesn’t immediately mitigate Navitas’ imminent tariff exposure nor losses, his background still offers long-term upside scenarios that could challenge my short thesis:

1. Increased Deal Wins in AI Verticals: Allexandre brings almost three decades of sales experience in the semiconductor industry, as evidenced in his past tenures at Texas Instrument, NXP, Fairchild, Integrated Device Technology (“IDT”, acquired by Renesas in 2019), and Renesas. This relevance to Navitas is further reinforced by his latest role as the Power division head at Renesas, where he’s led penetration into data center infrastructure opportunities. The background likely encompasses a deep network of potential customers and opportunities for Navitas, as it looks to establish a stronger foothold in the AI vertical.

Allexandre’s participation in Renesas’s 2024 acquisition of Transphorm also implies expertise in power semiconductor solutions supply chain management. This represents critical experience in leading Navitas’ diversification of its GaN wafer manufacturing footprint.

Taken together, Allexandre’s expertise could help strengthen Navitas’ AI deal wins, driving markets to overlook the company’s near-term exposure to tariffs and ballooning losses. However, all of these potential upsides remain speculative and may not materialize until 2027 when Navitas’ AI products scale. This accordingly leaves the immediate tariff overhang on the stock’s current valuation premium unaddressed.

2. Potential Renesas Partnership for U.S.-Based Manufacturing: Allexandre’s deep ties to Renesas could open doors to a potential partnership and/or product collaboration with Navitas.

Renesas currently has U.S.-based GaN/SiC wafer manufacturing capacity via its partnership with Wolfspeed and Polar Semiconductor. The company also owns U.S.-headquartered Transphorm, though the subsidiary’s main GaN wafer manufacturing facility is currently located in Japan. But because of emerging opportunities for GaN/SiC application in next-generation AI infrastructure, it’s unlikely Renesas would be willing to contract its U.S.-based capacity out to Navitas in the near-term. This is consistent with the fact that Renesas has also been named a key silicon provider for Nvidia’s next-generation 800 VDC architecture, which directly rivals Navitas.

However, in the longer-term, there is potential for R&D collaboration between the two companies that’d allow Navitas to diversify its GaN manufacturing footprint, and mitigate its exposure to semiconductor tariffs. This would be consistent with the partnership observed between Renesas and TenXer Labs – where Allexandre’s recently been appointed as a Board member – since 2021.

3. Buyout Potential: Sheridan’s sudden exit and Allexandre’s appointment also unlocks speculation of a potential Navitas sale. And Renesas could be a relevant suitor, given Allexandre’s long-time ties with the company.

Renesas, with its $1.5 billion cash balance and sustained profit accretion, could easily acquire Navitas at its current $1.3 billion market cap. And there’s incentive to do so, as such an acquisition could bolster Renesas’ GaN/SiC portfolio for AI applications over the longer-term. Such a buyout could also help Navitas diversify its current GaN wafer manufacturing capacity away from PSMC, and yield immediate cost synergies for Renesas. And Allexandre’s familiarity with Renesas’ operations and his previous role in the Transphorm acquisition brings relevant expertise to bridge such a deal.

Although there’s yet to be any public indications of such a scenario taking place, especially as Navitas’ Board emphasizes focus on independent growth under Allexandre’s leadership, it shouldn’t be overlooked. A Navitas buyout would cap immediate downside risks facing the stock and undermine my short thesis.

Conclusion: Short Thesis Intact, But Upside Risks Emerge

Navitas’ recent appointment of Allexandre to the CEO role risks countering my short thesis on the stock. His background is of extreme relevance to Navitas’ strategic pivot towards higher-margin AI applications in the long-term. For instance, Allexandre’s decades of sales experience and network acquired could reinforce Navitas’ penetration into emerging AI infrastructure opportunities. Meanwhile, his industry expertise acquired from leading Renesas’ Power division could help Navitas diversify its supply chain, improve its fundamentals, and even pave way for a potential buyout that could unlock shareholder value.

However, the core of my short thesis – namely, Navitas’ exposure to 100% semiconductor tariffs and persistent losses – remains unaddressed with Allexandre’s appointment. Coupled with a weak 2H25 outlook, a compressed liquidity runway, and intensifying competition, Navitas faces a 50% to 90% downside risk. As a result, I maintain my short thesis on the stock, but advise caution as impending clarity on Allexandre’s AI vision and business plan for Navitas could spark volatility – especially if markets embrace his strategic initiatives.

Disclaimer: This analysis is for informational purposes only and represents the opinions of Livy Research. It is not investment advice nor a recommendation to buy or sell the securities discussed.