Navitas Semiconductor (NVTS) has recently captured market attention, experiencing a significant surge in its stock valuation. While the company exhibits a high level of short interest, the dynamics suggest that a major short squeeze is improbable. A key driver for the optimistic perspective on Navitas lies in its strategic pivot towards developing high-margin power chips specifically designed for data centers. This directional shift is poised to capitalize on the increasing demands of advanced computing infrastructures. Moreover, the broader economic landscape, particularly the rising cost of copper, could inadvertently benefit Navitas by encouraging a greater adoption of their energy-efficient power solutions. However, investors should note a recent deceleration in trading activity, which might signal a cooling in market enthusiasm for the stock.

Following a notable 30% increase in its share price, catalyzed by a strategic alliance with Nvidia in May, Navitas Semiconductor (NASDAQ: NVTS) has emerged as a prominent entity on investor screens. The current short interest in the company stands at a considerable 24%. Nevertheless, the 'days to cover' ratio, a crucial metric indicating how long it would take for short sellers to buy back all borrowed shares, is remarkably low at just 1.2. This low figure substantially mitigates the potential for a significant short squeeze, suggesting that even with elevated short positions, the market's ability to absorb these shares quickly would prevent a dramatic upward price movement driven by short covering.

The fundamental strength of the bull case for Navitas is anchored in its evolving product strategy. The company is actively transitioning its focus towards the development and deployment of power chips with higher profit margins, particularly those tailored for the data center sector. A prime example of this strategic direction is their innovative 12 kW platform, which holds considerable potential to be integrated into advanced computing architectures, including Nvidia’s next-generation Blackwell/Rubin platforms. This move is critical as data centers represent a burgeoning market with a continuous need for more efficient and powerful components to support increasingly complex computational tasks and artificial intelligence applications.

Furthermore, an external economic factor that could provide an unexpected tailwind for Navitas is the persistent increase in copper prices. As copper becomes more expensive, manufacturers and technology companies are increasingly incentivized to seek out more cost-effective and efficient alternatives for power management. Navitas’s advanced power chips offer a compelling solution in this scenario, as they can reduce the reliance on conventional, copper-intensive power systems, thereby pushing more customers towards adopting their innovative and energy-saving semiconductor technologies. This trend could accelerate the market penetration of Navitas's products across various industries.

Conversely, the near-term outlook for Navitas presents some cautionary signals. A notable observation is the significant decline in trading volume, which has fallen by 27-28% compared to the three-month average. This decrease in trading activity could be interpreted as a fading interest among market participants, potentially indicating a wait-and-see approach or a diversion of attention towards other investment opportunities. This reduced liquidity might impact the stock's immediate price movements and its appeal to short-term traders.

Despite these mixed signals, with high short interest but low short squeeze potential, and a promising strategic shift countered by declining trading volume, the overall assessment remains optimistic. The company's strategic focus on high-growth, high-margin sectors like data centers, coupled with potential macro-economic tailwinds, positions it favorably for long-term growth. As such, the analyst maintains a 'Strong Buy' rating on Navitas Semiconductor, especially in anticipation of its upcoming Q2 earnings report. This conviction is further underscored by the fact that NVTS currently constitutes a significant 16% of the analyst's investment portfolio, reflecting strong confidence in its future performance.