Navigating Earnings Volatility: Why Wolfspeed's Leadership Change Offers a Contrarian Buy Opportunity Amid AI Hardware Uncertainty

The semiconductor industry has long been a theater of volatility, where technological breakthroughs and macroeconomic headwinds collide. For investors, the challenge lies in distinguishing between temporary turbulence and enduring transformation. Wolfspeed, Inc. (WOLF), a pioneer in silicon carbide (SiC) technology, offers a compelling case study in this regard. Amid a restructuring-driven earnings slump and uncertainty in AI hardware demand, the company's recent leadership change and strategic realignment present a contrarian opportunity for those willing to look beyond short-term noise.

A Leadership Shift with Semiconductor Credibility

In May 2025, Wolfspeed appointed Robert Feurle as its new CEO, a move that signals a pivot toward operational rigor and financial discipline. Feurle's resume is a masterclass in semiconductor leadership: he has steered global business units at ams-OSRAM, Infineon, and Micron, with a proven ability to scale production and optimize margins. Notably, his prior work at Infineon included deep involvement in SiC and IGBT technologies—core to Wolfspeed's value proposition. This insider knowledge, combined with his experience managing 10,000+ employees at ams-OSRAM, positions him to navigate Wolfspeed's complex restructuring while preserving its technological edge.

Feurle's mandate is clear: accelerate the path to free cash flow breakeven, strengthen the balance sheet, and leverage Wolfspeed's 200mm SiC manufacturing capabilities. These 8-inch wafers, produced at the Mohawk Valley Fab, offer a 30% cost advantage over 150mm alternatives, a structural edge in a market projected to grow to $7.3 billion by 2029. The company's recent $21 billion design-win backlog, including a landmark $2 billion 10-year supply agreement with General Motors (GM), underscores the demand for its vertically integrated SiC solutions.

Restructuring as a Catalyst for Long-Term Value

Wolfspeed's financials remain challenging. In Q3 2025, the company reported a non-GAAP gross margin of 2.2% and a negative adjusted EPS of $0.72, reflecting the costs of scaling production and restructuring. However, these figures mask a critical transformation. The company's restructuring support agreement (RSA) has reduced debt by 70% and cut annual interest expenses by 60%, freeing up capital for R&D and capacity expansion. With $1.3 billion in liquidity—including $200 million from an equity offering and $192 million in tax refunds—Wolfspeed is now positioned to fund its growth without relying on speculative financing.

The restructuring also includes aggressive cost-cutting: a 25% reduction in workforce, closure of non-core facilities, and $150 million in liquidity from asset sales. While these measures are painful in the short term, they align with Feurle's focus on operational excellence. The Mohawk Valley Fab, now operating at 90% capacity, is set to benefit from $750 million in CHIPS Act funding, further scaling output to meet surging demand in EVs and AI data centers.

Contrarian Logic in a Cyclical Sector

The case for Wolfspeed hinges on its unique positioning in the SiC market. While competitors like STMicroelectronics and Infineon rely on 150mm wafers, Wolfspeed's 200mm platform offers a moat in cost efficiency and scalability. This is particularly relevant for AI hardware, where SiC's ability to reduce energy loss and cooling costs in data centers is gaining traction. Despite this, Wolfspeed's stock trades at a steep discount—3x projected 2026 EBITDA—compared to 5–7x multiples for peers.

The risks are real: GM accounts for 30% of near-term revenue, and the company's equity holders will retain only 3–5% of the restructured entity. Yet, these challenges are temporary. The SiC market is expanding rapidly, driven by EV adoption, grid electrification, and AI infrastructure. Wolfspeed's $21 billion backlog and strategic partnerships with Renesas and GM provide a clear growth runway.

A Strategic Buy for the Patient Investor

For contrarian investors, Wolfspeed represents a rare intersection of technological leadership and financial rebirth. The company's restructuring, while painful, is creating a leaner, more agile entity poised to capitalize on the SiC boom. Feurle's leadership adds credibility to this vision, particularly in a sector where execution often trumps hype.

The key question is timing. With the restructuring expected to conclude by late Q3 2025 and the Mohawk Valley Fab scaling production, the next 12 months will be critical. If Wolfspeed can achieve free cash flow breakeven and maintain its 200mm cost advantage, the stock's current valuation—trading at a 94% discount to its 2022 peak—offers a compelling entry point.

In an era of AI-driven uncertainty, Wolfspeed's SiC technology is not just a component of the future—it is a bridge to it. For those willing to navigate the volatility, the rewards could be substantial.