Wolfspeed, Inc. (NYSE:WOLF)

 

Wolfspeed, Inc. (NYSE:WOLF)

Share Price: $9.74

Year-To-Date Performance: -77.47%

Analyst Upside Potential: 28.21%

Wolfspeed, Inc. (NYSE:WOLF) is a leading company in the semiconductor industry, specializing in wide bandgap semiconductors. These materials, particularly silicon carbide (SiC) and gallium nitride (GaN), are essential for various power applications due to their efficiency and performance advantages over traditional silicon-based components. It is one of the best tech stocks to invest in on the dip.

Wolfspeed, Inc. (NYSE:WOLF) opened the world’s largest 200mm silicon carbide plant in upstate New York in 2022 as management believes silicon carbide chips will disrupt the traditional silicon chips. The stock was doing well in a low interest rate environment and with the EV market running hot. However, as the interest rates rose and the EV market cooled down its stock took a hit and has been down by around 77% on a year-to-date basis.

During the first quarter of fiscal 2025 as well, the company reported significant steps towards its business expansion. The company targets generating approximately $3 billion in annual revenue from its new 200mm silicon carbide manufacturing footprint at facilities in Mohawk Valley, New York, and North Carolina.

It also signed a preliminary memorandum for up to $750 million in direct funding under the CHIPS and Science Act, along with an additional $750 million from a consortium of lenders. This brings the total potential funding to $2.5 billion, which will facilitate their expansion plans in the US.

In the first quarter, Wolfspeed reported a remarkable 2.5 times year-over-year growth in its automotive sector. The number of car models utilizing Wolfspeed’s silicon carbide solutions has quadrupled from 2023 to 2024, with expectations of a further 75% increase in 2025.

ClearBridge Growth Strategy stated the following regarding Wolfspeed, Inc. (NYSE:WOLF) in its Q3 2024 investor letter:

“We exited long-time holding Wolfspeed, Inc. (NYSE:WOLF), a leading global supplier of silicon carbide substrate wafers and devices. After giving management ample time to ramp production at its new Mohawk Valley facility, we closed the position due to continued execution missteps and cyclical headwinds impacting electric vehicle, industrial and energy applications that have repeatedly pushed the company’s path to profitability further out.”

Overall, WOLF ranks 10th on our list of best tech stocks to invest in on the dip. While we acknowledge the potential of WOLF to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WOLF  but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.