In This Article:
Wolfspeed WOLF shares have declined 7.2% year to date, underperforming the broader Zacks Computer and Technology sector’s decline of 5.7% and the Zacks Semiconductor – Discretes industry’s fall of 4.7%.
The underperformance can be attributed to Wolfspeed's weak financial results in the second quarter of fiscal 2025, led by softness in the industrial and energy markets. Weaker demand in these segments weighed on overall revenue growth, limiting the company's ability to generate stronger top-line performance.
High underutilization costs at Wolfspeed’s manufacturing facilities, along with lower efficiency during its transition to larger-scale production, have added to its financial strain. The resulting decline in the gross margin has further raised investor concerns about its profitability.
While the company's near-term outlook seems unattractive, several factors highlight its strong long-term growth potential, setting the stage for a brighter future.
Wolfspeed Price and Consensus
Wolfspeed price-consensus-chart | Wolfspeed Quote
WOLF Bets on EV Market & Business Growth
Despite the lower revenue levels, Wolfspeed continues to see strong growth in key areas, particularly in the EV market, wherein demand remains robust. This momentum is expected to continue, driving higher revenue contributions in the latter half of fiscal 2025.
WOLF is nearing the completion of a $5-billion semiconductor factory in Siler City, NC, expected to begin production in June 2025. This facility will manufacture advanced silicon carbide crystals for electric vehicles, contributing to significant regional growth.
The expansion of the Mohawk Valley fab is a key development, with revenue increasing sequentially to $52 million. Wolfspeed expects this growth to continue, projecting revenues between $55 million and $75 million for the fiscal third quarter.
Wolfspeed has secured significant support under the CHIPS and Science Act, reflecting its strategic focus on advancing U.S. semiconductor manufacturing. The U.S. Department of Commerce has proposed up to $750 million in direct funding to support the company's expansion of silicon carbide production. This government support and strategic partnership reinforce WOLF’s position in strengthening domestic supply chains and driving technological innovation.
Investors have a positive outlook on the growth potential of the silicon carbide market. S&S Insider projects the company to witness a 9.7% compound annual growth rate (CAGR) from 2024 to 2032, creating significant opportunities for Wolfspeed.