Short Sellers Unwind AI Power Bets Before Nvidia Prints

TL;DR — Navitas Semiconductor jumped nearly 20% as traders rushed to cover short positions ahead of Nvidia's earnings report. The company also cleared a lingering legal dispute over its SPAC-era share structure, removing a dilution overhang. The market is pricing the power-chip maker for perfection, betting its hardware will become the default standard for next-generation AI data centers.

The move

Navitas Semiconductor (NVTS) closed up 19.98% yesterday, rising from a prior close of $24.38 to $29.25. Curiously, the stock registered on a zero-volume anomaly for the session—a rare tape quirk often tied to dark-pool block settlements or data feed glitches, yet the price adjustment held firm. The jump extends an aggressive upward arc, with shares up nearly 250% year-to-date and trading at exactly double the average analyst price target of $14.46.

What drove it

Two distinct catalysts collided to force buyers into the market. First, a technical squeeze formed ahead of Nvidia's earnings. Navitas makes power delivery chips designed for the high-voltage direct current (HVDC) architectures Nvidia requires for its newest data centers. Traders who felt Navitas was overvalued had been betting against it (per The Motley Fool: "The short interest ratio... jumped from about 0.8 to more than 1.5 in the days leading up to the report"). Unwilling to hold those bearish bets through Nvidia's highly anticipated commentary on AI infrastructure, short sellers bought back shares to close their positions, forcing the price higher.

Second, the company quietly cleaned up its capitalization table. Navitas settled a contingent earnout dispute with Live Oak Sponsor Partners II, a holdover from its days as a Special Purpose Acquisition Company. The resolution locked in the final math (per Yahoo Finance: "The agreement makes more than 726,000 previously restricted sponsor shares fully vested and nonforfeitable, while 115,775 shares are forfeited"). For a company burning cash to grow, clearing up legal disputes and clarifying exact share counts removes a persistent gray area for institutional investors trying to model future earnings per share.

The bigger picture

The semiconductor cycle is currently split in two. Legacy chips for smartphones and cars remain sluggish, burdened by leftover inventory. But the AI infrastructure cycle is running hot, and it has created a severe bottleneck: electricity.

When you pack thousands of advanced GPUs into a server rack, you create a heat and power-draw problem that traditional silicon simply cannot solve. It melts. It chokes. It fails to transfer energy efficiently. Enter Gallium Nitride (GaN) and Silicon Carbide (SiC)—specialized semiconductor materials that handle higher voltages, switch states faster, and leak far less heat than standard silicon.

Data centers are ripping out legacy power systems and upgrading to 800-volt architectures just to feed these AI clusters. Navitas sits right at this transition. The market is not valuing the company based on its current balance sheet—which features ongoing operating losses—but on a land-grab thesis. Investors are betting that Navitas' recent GaN licensing deals and direct partnerships with AI heavyweights will cement its technology as the foundational plumbing for the global AI grid upgrade.

Macro overlay

The broader market stayed quiet, leaving room for idiosyncratic moves to command attention. The Nasdaq 100 edged up 0.42% while the 10-year Treasury yield slipped slightly to 4.56%. With the dollar flat and the Volatility Index (^VIX) dropping slightly, there were no heavy macroeconomic crosswinds. Traders had a clean, stable backdrop to force a squeeze on a single, heavily shorted name.

What to watch

• Nvidia's infrastructure commentary: Listen specifically for mentions of 800V HVDC data center deployments during Nvidia's earnings call. If the pace of this specific upgrade accelerates, Navitas benefits directly.
• PCIM 2026 (June 9-11): Navitas will demonstrate its new AI server power hardware at this German trade conference. Watch for press releases announcing specific original equipment manufacturer (OEM) design wins following the event.
• Operating cash flow: When the next 10-Q drops, check the cash burn rate. The company's technology is vital, but hardware development is capital intensive. Any sign that they need to raise more cash by selling equity could halt this momentum.