Wolfspeed's AI Data Center Pivot: Doubling Down on SiC Power for Hyper-Scale Compute
The AI Data Center Pivot
Wolfspeed's fourth-quarter print was not about the headline revenue number but about the narrative shift beneath it. The company is leaning hard into data center applications, where revenue in fiscal 2026 more than doubled versus the prior year. On the call, CEO Robert Feurle underscored the momentum: “In fiscal 2026, revenue in this business more than doubled versus fiscal 2025, including increasing approximately 20% from the fiscal third quarter to the fourth quarter.” — Robert Feurle, Chief Executive Officer · 2026-08-19 That's a stark contrast to a company that was once synonymous with EV traction inverters.
The growth is coming from power supply and solid-state transformers — the voltage ladder from 750V to 3.3kV. Feurle highlighted new design wins at LITEON and MacMic, and the company is moving beyond AC/DC supplies into battery backup, e-fuses, and high-voltage DC-DC conversion. “We doubled our revenue from FY '25 to '26. And that just shows you kind of the momentum this market segment has gained.” — Robert Feurle, Chief Executive Officer · 2026-08-19
Technology Leadership as a Moat
At PCIM, Wolfspeed announced its Gen 5 MOSFET technology, which it claims delivers the industry's best specific on-state resistance. The company also showcased a 10kV SiC MOSFET, landing a co-development deal with GE Aerospace for high-voltage applications. This is a clear effort to build a technology moat that justifies the vertical integration. CFO Gregor Issum spelled out the financial target:
The gross margin is still deeply negative — gross margin came in at -26.6% for the quarter — but volume is the variable. The company has virtually completed the transition to its 200mm Mohawk Valley fab, which gives it the capacity to scale without heavy CapEx.But in a ballpark, we would say on an $800 million annual run rate, that's probably the ballpark where a breakeven gross margin point lies right now.
From Auto Dependence to Diversification
The shift is also a response to a soft auto market. In prior quarters, Robert Feurle discussed the new go-to-market structure: “previous quarter, Q1 to Q2, we grew 50% on the data center side. This quarter, Q2 to Q3, we grew 30%.” — Robert Feurle, Chief Executive Officer · 2026-05-05 That momentum has persisted. Meanwhile, the company continues to win auto designs — it just landed a first-time award from a European Tier 1 for onboard chargers — but the growth engine is clearly the data center.
The margin improvement is incremental but steady: “Our adjusted non-GAAP gross margin for the quarter was minus 19.9%, reflecting a 70 basis point sequential improvement.” — Gregor Issum, Chief Financial Officer · 2026-08-19 The company also made progress on the balance sheet, ending the quarter with $1.1B in cash and netting a $41M working capital benefit from inventory reductions. CFO Gregor Issum noted that holders converted $46M of convertible notes, saving roughly $1M annually. The path to profitability is still steep, but the revenue mix shift and the capacity position are the building blocks.
As Feurle said on the February call, “That revenue growth here is really starting to pay off. In addition to that, it's also to get the right sales organization and the right channel strategy in place.” — Robert Feurle, Chief Executive Officer · 2026-02-04 That strategy is being executed. After a steep decline, the revenue base has stabilized — total revenue of $150M in Q4 is down 19% YoY but has held in a $140-160M range all year — and the mix is shifting toward higher-growth, higher-value applications.
The stock, though down ~63% from its mid-May peak, still reflects the long-term opportunity. The hyperscaler customers are being courted with a vertically integrated, domestic supply chain — a message that resonates in a world of trade disruptions.
Wolfspeed is early in its transformation, but the data center pivot is the clearest signal yet that it has a future beyond the EV treadmill.