Should You Buy, Sell or Hold Wolfspeed Stock Post Q2 Earnings?

Core Viewpoint - Wolfspeed reported mixed results for the second quarter of fiscal 2025, with a decline in revenues but strong demand in electric vehicles (EVs) and support from government initiatives like the CHIPS Act [1][2][7]. Group 1: Financial Performance - Revenues for Wolfspeed decreased by 13.4% year over year to $180.5 million [2]. - The company experienced a sequential decline of 6% in power device revenues and an 8% drop in materials revenue due to reduced inventory levels from customers [15]. - Gross margin fell significantly by 90.6% year over year, primarily due to underutilization costs at the Mohawk Valley facility [16]. - For the third quarter of fiscal 2025, Wolfspeed expects revenues between$ 170 million and $200 million, with a projected non-GAAP loss of 76 to 88 cents per share [17][18]. Group 2: Market Demand and Growth Drivers - Wolfspeed's EV revenues surged by 92% year over year, driven by increased demand and investments from major automotive companies like General Motors [8]. - The Mohawk Valley facility generated$ 52 million in revenues during the second quarter, with expectations for growth to between $55 million and$ 75 million in the next quarter [9]. - The company is benefiting from a growing network of partnerships, including collaboration with Infineon Technologies, which enhances supply chain stability and supports demand for silicon carbide solutions [10]. Group 3: Technological Advancements - Wolfspeed introduced its Gen 4 technology platform, which aims to improve system efficiency and reduce development costs, offering a 21% reduction in on-resistance and up to 15% lower switching losses [12][13]. - This new platform is focused on high-power applications, including EV powertrains and renewable energy, positioning the company for significant performance improvements [13]. Group 4: Competitive Positioning - Over the past month, Wolfspeed shares have declined by 19.8%, underperforming the broader Zacks Computer and Technology sector and the Zacks Semiconductor – Discretes industry [3][6]. - The company has underperformed compared to industry peer Tokyo Electron, which saw a 6.4% increase in stock value over the same period [6].