Wolfspeed Shares Slide 12% Pre-Market as Q4 Results Miss Estimates

Wolfspeed Inc. shares fell in pre-market trading Thursday after the company reported mixed fourth-quarter results.

Earnings Snapshot

Wolfspeed reported an adjusted loss of $2.26 per share, beating the market expectation of a $2.45 per share loss.

Revenue totaled $149.6 million, missing Wall Street's expectation of $224.48 million.

Adjusted gross margin improved 70 basis points sequentially to negative 19.9%. Favorable product mix helped results, including higher AI sales in the power segment and stronger RF sales in the materials segment.

Operating cash flow was negative $54 million. The figure includes a $41 million benefit from inventory reductions.

Wolfspeed ended the quarter with approximately $1.1 billion in cash and short-term investments, and approximately $600 million in net debt.

AI Data Center Demand Drives Device Sales

Device revenue reached approximately $106 million, up 6% sequentially, driven by AI data center demand. Materials revenue totaled approximately $43 million.

AI data center revenue grew approximately 20% sequentially. It also more than doubled from fiscal 2025 to fiscal 2026, partially offsetting weakness in the automotive business.

Wolfspeed secured new design wins with power supply companies Lite-On and Magmeet, which serve multiple hyperscale cloud providers. The company is also targeting opportunities related to high-voltage DC AI architectures, battery backup units, supercapacitors, and other data center applications.

Wolfspeed said its silicon carbide technology and vertically integrated 200mm manufacturing capacity position it to benefit from long-term AI data center infrastructure growth.

However, underutilization of factory capacity remains the biggest drag on margins. As a result, higher utilization remains key to future margin improvement.

Wolfspeed Expands Data Center Operations

Wolfspeed has launched a dedicated data center solutions team focused on its fastest-growing end market. Two industry veterans with high-voltage AI and data center power expertise will lead the team.

The company also highlighted its fifth-generation silicon carbide MOSFET technology. Wolfspeed is developing and producing fifth-generation products at its automated 200mm facility in Mohawk Valley, New York.

In the aerospace and defense sector, Wolfspeed signed an agreement with GE Aerospace to accelerate the adoption of high-voltage silicon carbide in industrial, aerospace, and defense markets.

In the automotive sector, Wolfspeed continues to expand its relationship with Toyota through on-board charging partnerships. The company also secured new business with a European Tier 1 supplier supporting on-board chargers for a major German automaker.

Meanwhile, the materials business continues to serve customers under 150mm long-term agreements as they transition to 200mm technology. The company has also begun shipping initial 300mm substrate engineering samples to multiple customers for evaluation.

Wolfspeed Issues First-Quarter Guidance

Wolfspeed expects first-quarter revenue of $140 million to $160 million, compared with analysts' estimate of $150.4 million.

The company expects adjusted gross margin to remain negative in the quarter.

WOLF Stock Performance: Wolfspeed shares fell 12.38% to $25.49 in pre-market trading Thursday.