Navitas Semiconductor shares fell 10.3% this week, pulled down not by its own news but by investor jitters after AI hardware supplier Fabrinet's earnings report. Navitas is still up 81.5% year to date even after the pullback.
Navitas Semiconductor's stock fell 10.3% this week, and the company had no negative business-specific news to explain it. Instead, the decline followed Monday's fiscal fourth-quarter report from Fabrinet, which investors treated as a warning sign for capital-intensive AI hardware names even though the numbers beat estimates. Navitas is still up 81.5% year to date, but its shares now trade 59% below their high for the year.
Fabrinet's beat still triggered a selloff
Fabrinet posted non-GAAP earnings of $4.10 per share on revenue of $1.32 billion for its fiscal year ended June 30, topping the average analyst forecast of $3.81 per share on $1.28 billion in revenue. The company also issued guidance for its current fiscal year that exceeded Wall Street's forecasts.
Despite that, investors zeroed in on a decline in Fabrinet's gross margin and its heavy capital expenditures, sending the stock tumbling. That sell-off spread to other specialized players in the AI hardware industry, and Navitas got caught up in the pullback.
What it means for Navitas
Fabrinet's report carries little direct read-through for Navitas' own business, since the two companies operate in different corners of the tech industry. If anything, Fabrinet's results and guidance signaled that demand for AI-related technology remains very strong.
Yet investors have grown more sensitive this year to heavy capital spending, wary of whether those investments will pay off over the long run. If that sensitivity leads the market to assign lower valuation premiums to AI hardware stocks broadly, Navitas could face additional pressure even without any change to its own results.
Source: Fool
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