1. Wolfspeed, Inc. (NYSE:WOLF)
Year to Date Gain: -63.23%
Number of Hedge Fund Holders: 29
Wolfspeed, Inc. (NYSE:WOLF) has been a big disappointment, underperforming the overall market despite operating in the semiconductor sector, which has been up over the past two years amid the artificial intelligence frenzy. While the stock is down by about 63.23% for the year, it is also down by about 90% from its 2021 peak, cementing its status as one of the worst-performing tech stocks in 2024.
Wolfspeed, Inc. (NYSE:WOLF) has been investing significant money to develop into a vertically integrated silicon carbide (SiC) chip manufacturer. Despite touting its Sic capabilities and design-in victories, Wolfspeed has been sluggish in demonstrating tangible returns on all its investments. Other rivals have already been increasing their SIC revenues and profits.
The company has not generated significant returns despite investing a lot. Its operating loss for the most recent quarter was $145.9 million, and revenue was essentially flat. Additionally, management has only projected flat revenue and even greater losses for the current quarter. At the same time, the company has roughly $2 billion in cash and $6 billion in debt.
Nevertheless, analysts are optimistic about Wolfspeed, Inc. (NYSE:WOLF) ‘s long-term prospects once its 200mm wafer plant comes online. The plant is expected to draw in top silicon carbide (SiC) clients because chips made on the larger 200mm wafer are less expensive than those made on the 150mm wafers, which are currently used to produce the majority of SiC chips. According to one of the Roth analysts, some electric vehicle (EV) negotiations with SiC customers might end, which would be a significant boost and a confirmation of Wolfspeed’s technology.
According to Insider Monkey’s database, the number of hedge fund portfolios holding Wolfspeed, Inc. (NYSE:WOLF) decreased from 33 in the previous quarter to 29 by the end of the second quarter. This indicates a reduction in interest or confidence among hedge funds in Wolfspeed, Inc. during this period.
Here is what ClearBridge Growth Strategy said about 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.”
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 timeframe. 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.
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