Wolfspeed Shares Under Pressure Following Disappointing Forecast

Wolfspeed US9778521024

Wolfspeed's latest quarterly results fell short of market expectations, casting a shadow over the semiconductor manufacturer's near-term outlook. The company's performance for its second fiscal quarter of 2026 was weighed down by persistent challenges in the electric vehicle sector, overshadowing robust growth in another key division.

The company reported revenue of approximately $168 million for the quarter, a figure that came in well below the consensus analyst expectation of $199 million. This was accompanied by a GAAP net loss of $151 million. Looking ahead, management provided third-quarter revenue guidance in the range of $140 million to $160 million, which also trails the market consensus of around $162 million.

A primary factor behind the revenue shortfall is identified as softer demand within electric mobility, coupled with inventory adjustments related to planned facility closures. This ongoing weakness has led the company to project continued negative gross margins for the upcoming quarter, with improvement anticipated only as operational streamlining measures take fuller effect.

Strategic Shifts and Bright Spots

In contrast to the automotive segment, Wolfspeed's business supplying AI data centers presented a significant positive, growing by roughly 50% compared to the prior quarter. This strength underscores the company's strategic push to diversify its revenue streams and reduce its historical reliance on the volatile automotive industry by expanding its focus on industrial and energy applications.

Operationally, Wolfspeed reported progress on its restructuring. The company completed the shutdown of 150-millimeter wafer production at its Durham facility approximately one month ahead of schedule. Manufacturing is now fully consolidated at the more advanced 200-millimeter fab in Mohawk Valley.

Furthermore, a key milestone was achieved with the receipt of CFIUS approval for its stock issuance to Renesas Electronics, finalizing a major component of its court-approved restructuring plan.

Financial Position and Forward Look

The company's liquidity position remains stable at $1.3 billion in cash. This balance was bolstered by a tax refund of approximately $700 million, a portion of which management has already used to reduce long-term debt by $175 million.

It is important to note that following the completion of its bankruptcy process, Wolfspeed has adopted "Fresh Start" accounting principles. Consequently, current financial reports are not directly comparable with those issued prior to September 30, 2025.

For the immediate future, management's focus is on stabilizing operational margins. The broader trajectory of the company, however, is expected to remain significantly tied to a recovery in demand from the electric vehicle market.