Up 14%, Should You Buy Wolfspeed Stock Right Now?

Key Points

• Wolfspeed emerged from Chapter 11 bankruptcy this September.

• Its carrying less debt and better positioned to expand its 200mm fabs.

• Its stock looks undervalued and ripe for a short squeeze.

• 10 stocks we like better than Wolfspeed ›

Five months ago, Wolfspeed (NYSE: WOLF) seemed doomed as its growth stalled out, its net losses widened, and its debt levels skyrocketed. On June 30, the chipmaker filed for Chapter 11 bankruptcy protection as its stock plummeted to an all-time low of $0.39 per share.

But on Sept. 29, it emerged from bankruptcy protection after reducing its total debt by roughly 70%, extending its remaining debt maturities to 2030, and reducing its annual cash interest expenses by about 60%. Unfortunately, all of its old shares were cancelled, and its investors recovered only a tiny fraction of its new shares.

However, the "new" Wolfspeed's stock has already risen about 14% since its opening price of $18 on Sept. 29. That gain might not seem too impressive, but it indicates its business is gradually stabilizing. So is it still worth buying in this wobbly market?

A pure play on the SiC and GaN markets

Wolfspeed was once a diversified producer of chips, lighting, and LED products called Cree. But by late 2021, Cree had divested its lighting and LED segments and rebranded itself as Wolfspeed after its eponymous silicon carbide (SiC) and gallium nitride (GaN) chips.

SiC and GaN chips can switch faster, consume less energy, and operate at higher temperatures and frequencies than traditional silicon (Si) chips. SiC chips operate at mid to high voltages, so they're often used in EV powertrains and industrial systems. GaN chips operate at low to mid-voltages, which makes them better suited for smaller devices such as phone and laptop chargers. SiC chips are slower, pricier, and more robust -- while GaN chips are faster and cheaper, but more delicate.

Unlike other fabless SiC and GaN chipmakers, such as Navitas Semiconductor (NASDAQ: NVTS), Wolfspeed is an integrated device manufacturer (IDM) that manufactures its own chips at its first-party foundries. Wolfspeed produces most of its chips at its 200mm facility in Mohawk Valley in upstate New York, and it's constructing a second 200mm fab in Siler City, North Carolina. It's gradually phasing out the production of its older 150mm chips in Texas and North Carolina.

Why did Wolfspeed's business nearly collapse?

Wolfspeed initially seemed like a great "pure play" on the growing SiC and GaN markets, but its business still nearly collapsed. Its revenue surged 42% in fiscal 2022 (which ended in June 2022) and 24% in fiscal 2023 as the SiC and GaN markets expanded. That growth was driven by the robust growth of the electric-vehicle, industrial, and renewable-energy markets. But its revenue fell 12% in fiscal 2024 and dipped another 6% to $758 million in fiscal 2025 as those three markets faced brutal macro headwinds.

As that demand petered out, Wolfspeed's adjusted gross margin plummeted from 36% in fiscal 2022 to just 2% in fiscal 2025. Yet it insisted on ramping up its chip production at its Mohawk Valley plant and continuing the construction of its Siler City plant, and its annual net losses widened from $201 million in fiscal 2022 to $1.6 billion in fiscal 2025. During that same period, its year-end liabilities increased nearly fivefold from $1.5 billion to $7.3 billion.

Wolfspeed probably expanded into that slowdown because it was cleared for a $750 million grant under the Biden administration's CHIPS and Science Act last October. But under the Trump administration, which wants to repeal the CHIPS Act, those crucial funds remain in limbo.

Wolfspeed's slowing growth, soaring expenses, and spiraling debt all forced it into bankruptcy protection. Its board also fired its CEO, Gregg Lowe, in late 2024 and replaced him with Robert Feurle, who previously worked at Micron and ams-OSRAM AG. Feurle guided Wolfspeed through its restructuring and believes its "improved financial stability" and "vertically integrated 200mm facility footprint" will put it in a better position to profit from the growth of the "AI, EVs, industrial, and energy" markets.

Is Wolfspeed's stock still worth buying?

From fiscal 2025 to fiscal 2027, analysts expect Wolfspeed's revenue to grow at a compound annual growth rate of 8% from $758 million to $889 million as its core markets stabilize. It isn't expected to generate stable profit, but its reduced debt should put it a better position to expand its 200mm plants -- even if it doesn't secure its CHIPS and Science Act grant.

With a market cap of $531 million, which was significantly reduced by the cancellation of its old shares, Wolfspeed trades at just 0.7 times this year's sales. At the same time, 62% of its float was still being shorted as of Nov. 14. That bargain-bin valuation and high short interest could set it up for a big short squeeze on any positive news about the SiC and GaN markets. So if you're bullish on the growth potential of the SiC and GaN markets, Wolfspeed still looks like a good long-term investment. It will remain volatile for the foreseeable future, but it's in much better shape than it was a year ago.

Should you invest $1,000 in Wolfspeed right now?

Before you buy stock in Wolfspeed, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Wolfspeed wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $580,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,084,986!*

Now, it’s worth noting Stock Advisor’s total average return is 1,004% — a market-crushing outperformance compared to 194% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

See the 10 stocks »

*Stock Advisor returns as of November 24, 2025

Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Wolfspeed. The Motley Fool has a disclosure policy.

Up 14%, Should You Buy Wolfspeed Stock Right Now? was originally published by The Motley Fool