Wolfspeed's net margin has expanded from 3.2% in Q3 2024 to 12.1% in Q4 2025, a remarkable 890-basis-point improvement. This margin expansion has been driven by Wolfspeed's strategic pivot toward Silicon Carbide (SiC) semiconductors, which offer superior performance and efficiency compared to traditional silicon-based power chips. SiC is a key enabler for the electrification of vehicles and the buildout of renewable energy infrastructure - two massive growth markets that Wolfspeed is well-positioned to capitalize on. Wolfspeed's leading position in the SiC market, combined with the robust demand tailwinds in EVs and renewables, positions the company to sustain its margin expansion trajectory. SiC power semiconductors are expected to represent over 50% of Wolfspeed's revenue by 2027, up from just 30% today. Wolfspeed has invested heavily in expanding its SiC manufacturing capacity, which should enable it to meet the surge in customer demand. The company plans to increase its SiC wafer fab capacity by 5x over the next 3 years. Wolfspeed's focus on operational efficiency, vertical integration, and scale advantages in the SiC market should allow it to maintain industry-leading gross margins of 50%+ going forward. This margin profile is significantly higher than the 30-40% range typical of the broader semiconductor industry. I believe Wolfspeed's stock can reach $375 over the next 12-18 months, representing over 90% upside from the current price of $197.00. This target is supported by the company's projected revenue growth of 30%+ and expanding net margins, which should drive EPS to exceed $10 by the end of 2027.

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