The company faces challenges in Europe, which led to a weaker-than-expected revenue forecast
Investors got an update on SolarEdge's solid-state transformer but seemed to focus on financials.
Shares of SolarEdge Technologies dropped to their lowest level in nearly four months on Wednesday after the maker of inverters and other solar equipment called for potentially lower sales in the current quarter.
Recently, SolarEdge has caught the interest of investors seeking out different ways to play the artificial-intelligence and data-center boom. The company announced last year it was working on a new utility-scale transformer designed to handle data-center electric loads more efficiently.
The stock (SEDG) is up nearly 30% this year, and it more than doubled in 2025. On Wednesday, however, it was off more than 25% and on track to finish at its lowest point since April 15, when it closed at $37.83.
Investors did get an update on the solid-state transformer project, but seemed to focus on the here and now - the lower-than-expected revenue outlook, which was mostly thanks to softness in SolarEdge's European business.
SolarEdge called for third-quarter sales between $310 million and $340 million, compared with the Wall Street consensus of $365 million, according to FactSet.
The sales outlook was a disappointing aspect of SolarEdge's otherwise good earnings, RBC Capital Markets' Chris Dendrinos said.
SolarEdge reported second-quarter sales of $342 million, up nearly 20% from the year-ago quarter and meeting analyst expectations. It also swung to an adjusted profit of 5 cents a share in the quarter, while the Street called for an adjusted loss of 3 cents a share, according to FactSet.
The potential sales drop in the third quarter would mostly come from SolarEdge's Europe business, but the company is seeing continued weakness in the U.S., particularly in the residential solar market, SolarEdge said.
The company said its solid-state-transformer project recently shifted to live demonstrations. SolarEdge showed potential customers and their engineering teams a working prototype just a couple of weeks ago, SolarEdge CEO Shuki Nir said on a call with analysts following the results.
SolarEdge expects to have a fully working, proof-of-concept prototype by the end of the year, and to establish pilot programs at data centers by next year. The new transformer could become a "meaningful" source of revenue for the company in 2028, Nir said.
SolarEdge is planning an investor day next month to give more details on potential market size and revenue streams from the project and other initiatives.
-Claudia Assis
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