Navitas (NVTS), ON Semiconductor (ON) And 3 More Stocks You Need To Be Watching

Navitas' revenue fell from $83M in 2024 to $46M in 2025, but Wall Street projects a rebound to $65M in 2027 and $122M in 2028 as it pivots to Nvidia-driven data-center power management. On Semiconductor ($22B market cap) has EPS estimates rising from $2.91 this year to $4.03 in 2027 and $5.36 in 2028, reflecting an expected automotive/industrial rebound; the stock is ~20% below mid-February levels. Bleeker also flags Wolfspeed (silicon carbide), Aehr Test Systems (revenue $66M in 2024, $59M in 2025, $47M expected in 2026 but up 75% YTD with a projected V-shaped recovery), and STMicroelectronics ($30B market cap; EPS down from $4.46 in 2023 to $0.53 recently) as speculative, AI-driven opportunities tied to new data-center architectures.

Analysis

The architectural shift in hyperscaler ASICs is not a one-off demand delta for semiconductors — it recasts the entire power-and-test supply chain. Expect durable step-ups in demand for GaN/SiC epi supply, advanced packaging (power modules and substrate laminates), and high-reliability burn-in/test flows for new heterogenous ASICs and photonics, creating multi-year capacity constraints that will amplify winners’ pricing power.

Second-order beneficiaries include specialty fabs and substrate suppliers, thermal-management and magnetics vendors, and contract manufacturers with 12-inch/150mm legacy capacity that can be repurposed quickly; conversely, broad-line analog incumbents without process specialization or test/qualification footprints risk losing design wins. This bifurcation will widen margins for niche specialists while compressing multiples for diversified peers until clarity on design wins and qualification cycles arrives.

Timing is the core risk: qualification and server OEM integration typically take multiple quarters, so market moves will hinge on a handful of public design-win/qualification announcements and hyperscaler build programs rather than quarter-to-quarter revenue noise. Key reversal vectors are hyperscaler protocol changes, vertical integration by major ASIC vendors, or unexpected reliability/thermal issues in first-generation GaN/SiC modules that delay deployment.

From a valuation standpoint, small-cap specialists trade like optionality; that optionality is exploitable with controlled option structures rather than outright equity bets. Position sizing should assume a binary mid-term outcome (slow adoption vs. fast scale) and be paired with hedges tied to hyperscaler capex or the broad semiconductor index to avoid headline-driven drawdowns.

Key Decisions for Investors

• Long NVTS via calendar call spread (buy 18–30 month LEAP calls, sell nearer-dated calls against 25–50% of notional) — allocate 0.75% NAV. Rationale: asymmetric upside if GaN design wins scale; capped premium limits downside to ~0.75% NAV while offering 3x+ upside vs status quo.
• Long AEHR LEAP calls (24–36 months) sized at 0.5% NAV, financed by selling short-dated calls or call credit spreads. Rationale: test/burn-in exposure is a choke point for qualification; a successful string of qualification announcements could re-rate shares several turns; max loss = premium paid.
• Pair trade: Long ON (1.0% NAV) / Short STM (0.7% NAV) to express divergent execution on automotive-to-data-center pivot. Rationale: industry-share shifts will show in order book and margin expansion over 12–24 months; target asymmetric 2:1 upside vs downside if ON’s execution outpaces STM.
• Tail hedge: buy protective puts on NVDA or buy an index semiconductor put spread (size 0.5% NAV) expiring 12–18 months to guard against a hyperscaler capex pullback or architecture consolidation risk. Rationale: centralization of demand around a single ASIC supplier creates systemic exposure—hedge cost is insurance against a systemic disappointment.