Wolfspeed WOLF shares gained 2.2% since it reported mixed second-quarter fiscal 2025 results on Jan. 29.

Wolfspeed benefited from strong government support, such as funding from the CHIPS Act and rising demand for silicon carbide in sectors like electric vehicles (EVs), renewables, and AI data centers, in the reported quarter. 

However, the company suffered from weak demand in the industrial and energy markets, reduced factory production, and significant underutilization costs at its Mohawk Valley facility. Wolfspeed’s revenues declined 13.4% year over year to $180.5 million.

Click here to check the details of WOLF’s second-quarter fiscal 2025 results.

Over the past month, WOLF shares have plunged 19.8%, underperforming the broader Zacks Computer and Technology sector’s decline of 1.9% and the Zacks Semiconductor – Discretes industry’s decline of 5.8%.

One Month Performance

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The company has also underperformed its industry peer, Tokyo Electron TOELY, over the past month. TOELY stock gained 6.4% over the past month.

WOLF Benefits From Strong EV Demand and Key Partnerships

Despite challenges, WOLF benefits from the growing demand for silicon carbide in EVs and the industrial and energy markets. These sectors are experiencing significant growth as the world shifts toward cleaner and more efficient technologies.

In the second quarter of fiscal 2025, Wolfspeed saw a significant increase in EV revenues, up 92% year over year. This was driven by continued demand for EVs and a surge in EV program investments from major automotive companies like General Motors GM.

Wolfspeed and General Motors collaboration will provide silicon carbide power device solutions for GM’s next-generation electric vehicle propulsion systems, enhancing efficiency and extending EV range.

The Mohawk Valley fab’s expansion is noteworthy. WOLF’s Mohawk Valley facility contributed $52 million in revenues in the second quarter of fiscal 2025, and it is expected to grow further, with guidance for the fiscal third quarter between $55 million and $75 million. This growth is tied to ramping up design wins at the facility.

Wolfspeed’s expanding network of partnerships, which includes Infineon Technologies IFNNY, has been a major growth driver. The collaboration with Infineon strengthens supply chain stability and supports the growing demand for silicon carbide solutions in automotive, solar, EV, and energy storage applications.

WOLF Expands With Gen 4 for Enhanced Efficiency

Wolfspeed’s prospects are bolstered by its leadership in silicon carbide technology, positioning the company at the forefront of high-power applications and accelerating the adoption of sustainable, energy-efficient solutions across multiple industries.

In the second quarter of fiscal 2025, Wolfspeed announced the introduction of its Gen 4 technology platform, an advancement in silicon carbide technology. 

This new platform is designed to enhance system efficiency, durability, and reduce development time and costs. It offers a 21% reduction in on-resistance and up to 15% lower switching losses. 

Focusing on high-power applications like EV powertrains, renewable energy, and industrial systems, Gen 4 is set to significantly boost performance while ensuring reliable, long-lasting operation in harsh environments.

Wolfspeed Faces Challenges Amid Weaker Market Demand

Despite a robust portfolio and a growing customer base, Wolfspeed is facing challenges with factory start-up weak industrial and energy market demand and underutilization costs, which are expected to impact the company’s top line.

In the second quarter of fiscal 2025, the company experienced a 6% decline sequentially in power device revenues due to weaker demand in the industrial and energy sectors. Materials revenue also dipped 8% sequentially as customers reduced inventory levels in response to the softer demand outlook in these markets.

Gross margin also decreased significantly by 90.6% year over year, primarily due to underutilization costs at the Mohawk Valley facility. As production ramp-up continues, these higher unit costs result in negative margin pressure.

Wolfspeed’s 3Q25 Guidance Not Rosy

For the third quarter of fiscal 2025, Wolfspeed expects revenues in the range of $170-$200 million. Non-GAAP loss is expected to be between 88 and 76 cents per share.

The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is currently pegged at $187.58 million, suggesting a 6.54% decline over the figure reported in the year-ago quarter.

The consensus mark for loss is pegged at 81 cents per share, which has increased by a couple of pennies in the past 30 days. The figure indicates a year-over-year decline of 30.65%.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

What Should Investors Do With WOLF Stock?

WOLF stock is not so cheap, as suggested by the Value Score of F.

In terms of the trailing 12-month Price/Book, WOLF is trading at 2.10X, higher than the industry’s 1.08X.

Price/Book

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Currently, Wolfspeed carries a Zacks Rank #3 (Hold), implying that investors should wait for a better entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Infineon Technologies AG (IFNNY) : Free Stock Analysis Report

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