Key Takeaways
Enphase Energy Inc. (ENPH) shares fell more than 10 percent after the solar equipment maker reported first-quarter revenue fell 21 percent year-over-year to $282.9 million, as a slowdown in U.S. solar demand overshadowed its strategic push into data centers.
"Europe is increasingly becoming a battery-critical market," Chief Executive Officer Badrinarayanan Kothandaraman said, noting that "solar and battery activations [are] up healthy double digits across multiple European markets," which helped to partially offset domestic weakness.
The Fremont, California-based company reported a net loss of $7.4 million, or 6 cents per share, a sharp reversal from a profit of $29.7 million a year earlier. On an adjusted basis, earnings of 47 cents per share beat analyst forecasts of 43 cents, according to FactSet data.
The stock drop reflects investor concern over the core residential solar business, which saw demand fall after a key federal tax credit for homeowners expired at the end of 2025. For its second quarter, Enphase expects revenue of $280 million to $310 million, which brackets analyst estimates of $294.9 million.
The expiration of the tax credit was the primary driver for a 23 percent revenue decline from the fourth quarter of 2025 and prompted the company to reduce its workforce by about 6 percent in January. To remain competitive, Enphase has also reduced prices for its microinverters and batteries.
While its core market struggles, Enphase is pivoting to a major new growth area: power for artificial intelligence. The company confirmed it is developing a 1.25 megawatt solid-state transformer designed for AI data centers, with more than 80 engineers assigned to the program. This move places it in a high-demand sector that has recently boosted stocks of other power-focused companies like Bloom Energy.
The results place Enphase at a crossroads, testing investor patience as its legacy solar market contracts while its new AI power venture is still in early development. Investors will be closely watching for any signs of stabilization in the U.S. solar market and for the first commercial wins from its data center division in the second half of the year.
This article is for informational purposes only and does not constitute investment advice.
