Wolfspeed (WOLF 8.14%) hasn't quite delivered on the power and speed its company name might suggest. Shares of the semiconductor and silicon carbide technologies innovator fell by a dramatic 85% in 2024 amid an underwhelming financial performance and setbacks to its growth targets.
Despite the sheepish headline numbers, Wolfspeed stock still deserves a closer look as it has a lot of potential. Following the deep reset of expectations, a path for the company to ramp up production and improve cash flow suggests a more positive outlook.
Is the horizon bright enough to make Wolfspeed a compelling stock to buy in 2025? Here's what you need to know.
A revolutionary high-performance material
Wolfspeed is recognized as a leading manufacturer of wide-bandgap semiconductors, specializing in devices like MOSFETs (a type of electronic device that controls the flow of electricity between two terminals) and diodes based on silicon carbide (SiC).
This high-performance material delivers superior electrical properties compared to conventional silicon, enabling it to withstand extreme temperatures and voltages. This aspect is critical to emerging applications such as fast-charging electric vehicles (EVs), next-generation power storage, and renewable energy solutions.
While industry competitors such as STMicroelectronics and Infineon Technologies also offer SiC-based technologies, Wolfspeed as a U.S.-based manufacturer is leading an industry transition toward 200 millimeter (mm) wafers, marking a leap in efficiency compared to legacy 150mm systems. The SiC market is poised for significant growth in the next decade.
A CHIPS Act recipient
A key development for Wolfspeed in 2024 was a $750 million award by the U.S. Department of Commerce through the CHIPS Act, a program aimed at incentivizing U.S. semiconductor manufacturing to strengthen domestic supply chains.
The proposed funding, dependent on reaching key milestones, was matched by a separate $750 million investment from a major investor group allowing Wolfspeed to move forward with a facility expansion in New York and the construction of a dedicated SiC site in North Carolina, set to begin operations this year.
At full utilization, Wolfspeed expects $3 billion in revenue as a long-term financial target for its 200mm wafer footprint capacity. This runway compared to the company's $807 million in 2024 revenue highlights the allure of Wolfspeed stock as an investment as it may still be in the early stages of a high-growth opportunity.
Image source: Getty Images.
Profitability remains elusive
The challenge for Wolfspeed has been in navigating slower-than-anticipated demand, particularly across industrial and energy sectors.
Although Wolfspeed's EV business remains a bright spot and key growth driver, with an increasing number of manufacturers adopting its SiC powertrain solutions across their vehicle models, the company's overall performance has fallen well below previous guidance, which helps explain the poor stock price performance.
In the company's fiscal 2025 first quarter (for the period ended Sept. 29), Wolfspeed reported a 1% decline in total revenue alongside a larger operating loss based on heavy spending toward facilities construction. The company is pointing to $11 billion in design wins as a key performance metric reflecting the operating backlog and ongoing optimism in long-term fundamentals.
That being said, it appears the market is skeptical of company targets. According to Wall Street analysts, Wolfspeed is expected to post a 2.2% revenue decline and a wider loss in 2025 compared to last year, as gains from its new 200mm SiC production facility will be offset by the closure of its 150mm manufacturing plant.
For 2026, the trends look better with revenue estimated to reach $1.2 billion, representing a 49% growth rate while another year of negative earnings per share (EPS) at least begins to narrow, setting up a stronger latter half of the decade as part of the stock's bullish case.
| Metric | 2025 Estimate | 2026 Estimate |
|---|---|---|
| Revenue | $789 million | $1.2 billion |
| Revenue growth (YOY) | (2.2%) | 48.7% |
| Earnings per share (EPS) | ($3.49) | ($2.20) |
| EPS growth (YOY) | N/A | N/A |
Data source: Yahoo Finance. YOY = year over year.
My 2025 Wolfspeed prediction
Wolfspeed shares are trading near their 52-week low, with a forward price-to-sales (P/S) ratio of approximately 1. Investors who believe in the company's ability to execute its long-term growth strategy might view the current stock price as an attractive entry point for establishing a small position, anticipating a potential recovery.
I'm less optimistic and see little reason to buy the stock with conviction given the lingering uncertainties. My prediction is that Wolfspeed's stock will stay volatile until there is evidence of improving demand and accelerating growth. Ultimately, I believe there are better opportunities elsewhere in the stock market for investors.
