Why Wolfspeed Stock Just Popped

Wolfspeed (NYSE: WOLF) stock jumped 4.7% through 10:45 a.m. ET Monday after the silicon carbide and gallium nitride semiconductor specialist announced positive news for its balance sheet.

Citing Section 48D of the Internal Revenue Code, and specifically, the Advanced Manufacturing Investment Credit (AMIC) contained therein, Wolfspeed says the IRS just gave it a $698.6 million income tax refund.

$698.6 million in cash.

Image source: Getty Images.

All of a sudden, Wolfspeed's rolling in dough

Wolfspeed notes it's already received $186.5 million in cash refunds from the IRS under the AMIC in 2025. Now that fiscal 2026 has begun, the company is taking another stride toward "monetization of the approximately $1 billion of Section 48D cash tax refunds [it has] accrued from the AMIC."

Now, cash is always nice to have, and everyone enjoys getting a tax refund from the IRS, but this news is especially good for Wolfspeed. On the one hand, the company already has roughly $925 million more cash than debt on its balance sheet. On the other hand, though, Wolfspeed has been burning cash for five years straight, so that cash hoard won't last forever.

Is Wolfspeed stock a buy?

Wolfspeed noted in its press release that this latest tax refund will bring its cash balance up to "approximately $1.5 billion," giving the company "enhanced financial flexibility as it advances the ramp of its 200mm silicon carbide manufacturing footprint."

That all sounds great, until you realize that last year alone, Wolfspeed burned through nearly $2 billion in cash -- and that analysts polled by S&P Global Market Intelligence estimate Wolfspeed will burn another $2.3 billion this year!

Long story short, a big cash refund from the IRS will certainly come in handy -- but it still might not be enough to save Wolfspeed.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Wolfspeed. The Motley Fool has a disclosure policy.