Patent Lawsuit and Index Removal Derail Navitas Semiconductor’s AI Data Center Dreams

Navitas Semiconductor is discovering that even a sizzling pivot to artificial intelligence infrastructure cannot insulate a stock from legal turbulence. The company’s shares have tumbled more than a third over the past month, dragged down by a patent infringement suit from rival Wolfspeed and a humbling exit from several key Russell benchmarks. The retreat comes just weeks after the stock had nearly doubled, powered by hopes that its gallium-nitride (GaN) and silicon-carbide (SiC) chips will become critical components in next-generation AI data centers.

The sell-off accelerated last week after Wolfspeed filed its complaint on July 10 in the U.S. District Court for Delaware. The action targets the heart of Navitas’s product lineup — the GaNFast, GaNSlim, and GaNSafe transistor families, along with the GeneSiC MOSFETs and the SiCPAK series. Wolfspeed argues that Navitas is infringing on proprietary technology covering both GaN and SiC power semiconductors.

By Friday’s close, Navitas shares had sunk 6.40% on the day to €11.70, bringing the weekly loss to 10.69% and the 30-day decline to 34.27%. That leaves the stock 59.9% below its 52-week high of €29.20 — reached on May 26, when the AI narrative was in full swing — though still roughly 90% above the February trough of €6.15. The 14-day relative strength index of 33.7 signals deepening oversold conditions, and the stock now trades below both its 50-day moving average of €18.58 and barely above the 100-day average of €13.29. The annualized 30-day volatility has blown out to 121.24%, a measure of how jittery holders have become.

Wolfspeed’s Financial Woes Fuel Suspicion

Navitas was quick to dismiss the claims as unfounded, vowing to mount a vigorous defense using a portfolio of more than 300 granted and pending patents. Management sees the lawsuit as a tactical move by a competitor under its own financial strain: Wolfspeed posted third-quarter revenue of $150 million and a negative gross margin of 27%, while roughly 54% of its shares are sold short. Industry observers note that tying up a faster-growing rival in years-long litigation could buy Wolfspeed time, even if the case ultimately fails.

Should investors sell immediately? Or is it worth buying Navitas Semiconductor Corporation?

The legal blow landed just as Navitas was absorbed into a different kind of drama. At the end of June, the stock was dropped from the Russell 2000 Value and Russell Microcap indices, a removal that analysts at TipRanks say amplified selling pressure and stoked dilution fears among investors. Adding to the governance shakeup, shareholders voted to eliminate the company’s staggered board elections; starting next year, all directors will stand for annual re-election.

The AI Narrative That Propelled a 151% Rally

Before the clouds gathered, Navitas had been riding one of the semiconductor sector’s most dramatic turnarounds. Shares surged 151% in the first half of 2026, driven by the so-called “Navitas 2.0” strategy that redirects focus from consumer electronics toward high-margin applications in AI data centers, electric vehicles, and renewable energy. The company landed a commercial order for GaN and SiC components used in 800-volt power architectures for generative AI servers and deepened its ties with Nvidia through the MGX ecosystem.

Navitas says it has now shipped more than 300 million GaN devices and 30 million SiC devices. Revenue in the first quarter rose 18% sequentially, though the company has cautioned that profitability remains a distant goal — not expected before 2029. Analysts remain split: a recent American Association of Individual Investors survey gave the stock a Momentum Score of 97 out of 100, a near-perfect rating for price strength, yet simultaneously flagged the valuation as “Ultra Expensive.” The broader consensus on Wall Street is a “Hold,” reflecting the tension between the growth opportunity and the mounting risks.

Investors will get the next hard look at the numbers when Navitas reports second-quarter results later this month. The market will be watching for any update on the legal costs tied to the Wolfspeed suit, as well as evidence that the 800-volt platform is scaling commercially. With the stock already cut in half from its peak and volatility at extreme levels, the earnings call could determine whether the AI data center story can regain its footing — or whether the legal and structural headwinds have only begun to bite.