Key Takeaways
- Shares of WOLF plummeted 11% during after-hours trading following Q4 earnings release
- Reported EPS loss of $2.26 exceeded one projection but significantly underperformed another consensus estimate calling for a $0.52 loss
- Fourth-quarter revenue totaled $149.6 million, missing certain Wall Street projections of $223.55 million
- Revenue from AI data center applications more than doubled from prior year and climbed 20% sequentially
- First-quarter revenue guidance ranges from $140 million to $160 million, with continued gross margin headwinds
Shares of Wolfspeed experienced an 11% decline in after-hours trading Tuesday following the silicon carbide semiconductor manufacturer’s release of fourth-quarter financial results. The stock had previously closed the regular session down 7.5% at $26.00 before the earnings announcement.
Wolfspeed Inc., WOLF
The chipmaker disclosed a Q4 earnings per share loss of $2.26. While this figure surpassed one analyst projection anticipating a $2.45 loss, it substantially underperformed an alternative consensus estimate of a $0.52 loss, varying by data source. Total revenue reached $149.6 million, aligning with certain forecasts while falling considerably short of other expectations targeting $223.55 million.
The company’s gross margin settled at 25%, which executives attributed to insufficient factory utilization rates. This underutilization is anticipated to continue pressuring profit margins throughout the upcoming quarter.
Artificial Intelligence Revenue Shines
A notable positive emerged from the AI sector. Wolfspeed disclosed that revenue generated from AI data center operations more than doubled compared to the same period last year in Q4, while advancing 20% versus Q3. Company leadership highlighted this as a significant shift in demand patterns.
This upward trajectory has helped counterbalance a substantial decline in electric vehicle-related demand. Revenue from the EV sector has contracted across both of Wolfspeed’s primary business segments: the materials division, responsible for manufacturing silicon carbide wafers, and the power products division.
The materials segment experienced particularly challenging conditions during the quarter. Revenue plunged 44% year-over-year and declined almost 14% sequentially from Q3. Market analysts view this weakness as a primary driver behind the stock’s sell-off despite the company beating certain earnings expectations.
Financial Position and Liabilities
Wolfspeed concluded the quarter holding $1.1 billion in cash reserves. The company’s total debt obligation currently sits at $1.7 billion. Management indicated meaningful progress was achieved in reducing outstanding debt during the quarter.
The semiconductor maker filed Chapter 11 bankruptcy protection on June 30, 2025, successfully exiting the restructuring process last September. Following emergence, WOLF shares had rallied as much as 80% year-to-date prior to Tuesday’s post-earnings decline.
Looking ahead to Q1, Wolfspeed issued revenue guidance ranging from $140 million to $160 million. The $150 million midpoint approximates Wall Street’s consensus forecast of $150.4 million. Operating expenses are projected to fall between $62 million and $66 million.
Gross margin compression is expected to persist due to continued factory underutilization challenges.
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