Hidden Gem: Is Wolfspeed (WOLF) A Buy?

Shares of semiconductor manufacturer Wolfspeed (WOLF) have plummeted, reaching price levels unseen since 1996 after falling approximately 94% over the last 52 weeks. The company specializes in energy-efficient silicon carbide (SiC) and gallium nitride (GaN) chips, crucial components for electric vehicles and batteries. While the EV market faces headwinds, Wolfspeed maintains significant annual sales nearing $1 billion, yet struggles with profitability and currently trades at a market capitalization of only $400 million.

The stock's trajectory worsened recently, falling almost 50% following concerns that anticipated CHIPS Act funding, estimated at nearly $1 billion, might not materialize. This uncertainty stems from a broader push to reduce government spending by Donald Trump and Elon Musk.

Despite this negative outlook, potential political and economic factors could favor Wolfspeed receiving the funds. The company is strategically located in North Carolina, a key swing state, and employs over 5,000 people there. With factories in North Carolina and New York, Wolfspeed represents domestic semiconductor production, potentially offering tariff-free, US-made alternatives and bolstering national supply chain independence.

From this perspective, denying Wolfspeed the CHIPS Act funding could be viewed as counterproductive to stated goals of technological self-reliance and potentially damaging to a significant domestic employer. If the funding is ultimately approved, Wolfspeed's severely depressed stock price could offer substantial recovery potential, making it a speculative investment highly dependent on this binary outcome.