Is SolarEdge (SEDG) a Buy After Recent Volatility?

The recent volatility in SolarEdge Technologies (SEDG) has sparked debate among investors. With Trump’s 2025 policies phasing out solar tax credits and imposing tariffs, the U.S. solar market faces headwinds. However, SolarEdge’s strategic pivot to international markets, resilient financials, and analyst optimism suggest the pullback may present a compelling entry point for long-term investors.

Political Headwinds and U.S. Market Challenges

President Trump’s "One Big Beautiful Bill Act" has disrupted the U.S. solar sector by phasing out tax credits for solar and wind energy, favoring hydropower and nuclear alternatives [1]. This policy shift has led to a 42% drop in SolarEdge’s stock price at one point in 2025 [1]. Additionally, tightened federal permits and tariffs on solar imports from Southeast Asia have increased costs and supply chain risks [3]. BloombergNEF projects a 23% decline in U.S. solar installations through 2030 compared to earlier forecasts, directly threatening SolarEdge’s domestic growth [5].

Despite these challenges, the company is adapting. CEO Shuky Nir emphasized in Q2 2025 earnings calls that SolarEdge is expanding U.S. manufacturing to leverage the 45X Advanced Manufacturing Credit, aiming to neutralize tariff impacts by 2026 [1]. This onshoring strategy aligns with the Inflation Reduction Act’s incentives, which have sustained some U.S. solar growth [4].

Analyst Sentiment: Mixed but Optimistic

Analyst ratings for SEDG remain mixed, with a "Reduce" consensus from 28 firms, including 10 "Sell" and 18 "Hold" ratings [1]. However, recent upgrades from Barclays, UBS, and KeyCorp signal cautious optimism. Barclays raised its price target from $12 to $29, while UBS increased its target to $30, maintaining a "neutral" rating [1]. These upgrades follow SolarEdge’s Q2 revenue of $289.43 million, a 9% year-over-year increase and a 32% sequential jump [1].

The stock’s 31.8% month-to-date gain as of August 29, 2025, reflects investor confidence despite the bearish consensus [6]. Analysts project an average 1-year target price of $18.20, implying a potential 44.5% downside from the current $32.81 [1]. Yet, the recent Q3 revenue guidance of $315M–$355M (vs. $296.7M estimate) has prompted price target revisions, suggesting earnings resilience [5].

Financial Resilience and Strategic Diversification

SolarEdge’s Q2 2025 results highlight operational improvements. Non-GAAP gross margin expanded to 13.1%, up from 7.8% in Q1, driven by higher revenue and cost efficiencies [2]. The company also increased cash reserves to $131.8 million, providing liquidity for R&D and strategic acquisitions [3]. Management anticipates further margin improvements in Q3, with non-GAAP gross margin projected at 15–19% despite a 2% tariff impact [3].

Critically, SolarEdge is diversifying its revenue streams. A partnership with Schaeffler to deploy 2,300 EV charging points in Europe and growth in commercial storage solutions position the company to offset U.S. market risks [3]. This pivot aligns with global trends, as the residential solar market faces headwinds in 2026 [1].

Global Clean Energy Incentives: A Long-Term Tailwind

While the U.S. market falters, global clean energy incentives are accelerating SolarEdge’s international expansion. The EU added 67 GW of solar capacity in 2024, supported by the Green Deal and Carbon Border Adjustment Mechanism [1]. India, now the third-largest solar market, installed 30.7 GW in 2024, driven by its 500 GW non-fossil fuel target by 2030 [1]. Latin America’s Brazil added 14 GW of solar in 2024, fueled by distributed generation and rural electrification [1].

SolarEdge is well-positioned to capitalize on these trends. Malaysia’s Corporate Renewable Energy Supply Scheme and Indonesia’s power wheeling policies are creating favorable conditions for solar-storage projects [3]. Additionally, Singapore’s carbon credit purchases and Vietnam’s Direct Power Purchase Agreement (DPPA) scheme are expanding renewable energy adoption [4].

Conclusion: A Calculated Buy for Long-Term Investors

SolarEdge’s stock has faced significant volatility due to U.S. policy risks, but its financial resilience, strategic diversification, and global market opportunities suggest the pullback is temporary. While the Trump administration’s policies create near-term uncertainty, the company’s onshoring efforts, margin improvements, and international expansion plans mitigate these risks.

For investors with a long-term horizon, SEDG’s current valuation—trading at a discount to its 2028 revenue projections of $1.7 billion [3]—offers a compelling entry point. The global solar market’s projected 10.6% CAGR from 2025 to 2030 [2] further underscores SolarEdge’s potential to thrive beyond U.S. borders. However, investors must remain cautious about regulatory shifts and supply chain bottlenecks.

In a sector defined by rapid innovation and policy-driven cycles, SolarEdge’s adaptability and global reach position it as a resilient long-term play.

Source:
[1] SolarEdge Technologies, Inc. (NASDAQ:SEDG) Receives Consensus Rating of "Reduce" from Analysts [https://www.marketbeat.com/stocks/NASDAQ/SEDG/forecast/]
[2] Global Solar Outlook 2025–2029: SolarPower Europe [https://cleantechnica.com/2025/05/09/global-solar-outlook-2025-2029-solarpower-europe-forecasts-1-tw-annual-installations-by-2030/]
[3] SolarEdge Announces Second Quarter 2025 Financial Results [https://investors.solaredge.com/news-releases/news-release-details/solaredge-announces-second-quarter-2025-financial-results]
[4] ASEAN's clean power pathways: 2024 insights | Ember [https://ember-energy.org/latest-insights/asean-insights-2024/policy-insights/]
[5] Trump Slams the Brakes on US Wind and Solar Growth [https://about.bnef.com/insights/clean-energy/trump-slams-the-brakes-on-us-wind-and-solar-growth/]
[6] JPMorgan downgrades SolarEdge stock to Neutral despite raising price target [https://www.investing.com/news/analyst-ratings/jpmorgan-downgrades-solaredge-stock-to-neutral-despite-raising-price-target-93CH-4134651]