Key Takeaways
- Shares of WOLF declined 11% in extended trading following quarterly earnings release
- Company posted EPS loss of $2.26, exceeding one forecast but falling short of another consensus estimate calling for a $0.52 loss
- Quarterly revenue totaled $149.6 million, missing certain Wall Street projections of $223.55 million
- Revenue from AI data center applications more than doubled versus the prior year and increased 20% sequentially
- First-quarter outlook calls for $140 million to $160 million in revenue, with continued gross margin headwinds
Shares of Wolfspeed experienced an 11% decline in after-hours trading Tuesday following the silicon carbide semiconductor manufacturer’s fourth-quarter earnings announcement. The stock had already fallen 7.5% during regular market hours, closing at $26.00 per share before the financial results were released.
Wolfspeed Inc., WOLF
The semiconductor company disclosed a fourth-quarter earnings per share loss of $2.26. While this figure surpassed one analyst projection anticipating a $2.45 loss, it significantly underperformed against another consensus estimate of just a $0.52 loss per share. Quarterly revenue registered at $149.6 million, aligning with certain forecasts while falling substantially below alternative projections that anticipated $223.55 million.
The company’s gross margin reached 25% for the quarter, a result management linked to insufficient factory capacity utilization. This utilization challenge is anticipated to persist and continue pressuring profit margins throughout the upcoming quarter.
Strong Performance in AI Sector
The notable positive development emerged from the AI sector. Wolfspeed reported that revenue generated from AI data center applications surged more than 100% year-over-year during Q4, while also posting 20% sequential growth from the third quarter. Company leadership highlighted this performance as representing a significant transformation in their customer demand profile.
This AI-driven growth has helped counterbalance significant weakness in electric vehicle demand. Revenue from the EV sector has contracted across both of Wolfspeed’s primary business segments: the materials division, which manufactures silicon carbide wafers, and the power products division.
The materials business segment experienced particularly challenging conditions during the quarter. Revenue plummeted 44% compared to the same period last year and decreased nearly 14% from the prior quarter. This pronounced weakness in the materials division is widely viewed as the primary catalyst for the stock’s sharp selloff, overshadowing the partial earnings beat.
Financial Position and Debt Structure
Wolfspeed concluded the quarter holding $1.1 billion in cash and cash equivalents. The company’s total debt obligation currently stands at $1.7 billion. Leadership indicated that meaningful progress was achieved in reducing outstanding debt during the quarter.
The company entered Chapter 11 bankruptcy protection on June 30, 2025, successfully completing restructuring and emerging last September. Following emergence, WOLF stock had rallied as much as 80% year-to-date prior to Tuesday’s decline.
Looking ahead to the first quarter, Wolfspeed provided revenue guidance ranging from $140 million to $160 million. The midpoint of this range, $150 million, closely matched the Wall Street consensus estimate of $150.4 million. Operating expenses are projected to fall between $62 million and $66 million.
Company management indicated that gross margin pressure is expected to continue as a result of persistent underutilization at manufacturing facilities.
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