SolarEdge Technologies (SEDG) AI Stock Analysis

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SolarEdge Technologies

(NASDAQ:SEDG)

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Neutral 60 (OpenAI - 5.2)

Rating:60Neutral

Price Target:

$45.00

▲(11.39% Upside)

Action:ReiteratedDate:02/19/26

The score reflects a company in a credible operational and cash-flow recovery (improving margins, positive free cash flow, and constructive 2026 guidance), partially offset by still-weak underlying profitability and a pressured equity base. Technicals are moderately supportive, while valuation remains constrained by ongoing losses and no dividend yield.

Positive Factors

Revenue Recovery & Market Share

Sustained revenue rebound indicates restored end-market demand and commercial traction. A 30% YoY recovery reflects durable order flow and reseller/installer momentum, supporting higher installed base and recurring software/service opportunities that underpin multi-quarter revenue durability.

Margin Expansion Trajectory

Consecutive quarter margin expansion signals structural improvement from SKU rationalization, mix shifts and manufacturing actions. Improvements driven by product and supply strategies (Single SKU, U.S. manufacturing) bolster sustainable gross margins versus one-off cost saves.

Debt Reduction & Cash Generation

Material deleveraging plus positive free cash flow restore financial flexibility. A stronger liquidity position and lower leverage reduce refinancing risk and provide runway to fund product launches, manufacturing ramp and commercialization efforts over the next several quarters.

Negative Factors

Persistent Losses & Weak Profitability

Despite top-line and margin recovery, deep net losses and negative margins indicate incomplete earnings power restoration. Continued losses erode equity and limit reinvestment capacity; profitability must normalize across cycles to sustainably fund growth without recurring dilution or balance-sheet stress.

Working Capital / Inventory Build

A deliberate inventory build ties up cash and increases exposure to demand shifts. Given prior multi-year cash flow volatility, higher inventory raises the risk of incremental working-capital strain if product ramp timing or end-market uptake slows, pressuring FCF durability.

Multi‑year Commercialization & Execution Risk

The large AI data-center opportunity is strategically attractive but multi-year and technically complex. Long qualification cycles and pilot dependencies create execution risk and delayed monetization, meaning capital and management focus may be tied up for years before material revenue arrives.

SolarEdge Technologies (SEDG) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$2.58B

Dividend YieldN/A

Average Volume (3M)2.98M

Price to Earnings (P/E)―

Beta (1Y)1.12

Revenue Growth-0.14%

EPS Growth66.71%

CountryUS

Employees3,961

SectorTechnology

Sector Strength88

IndustrySolar

Share Statistics

EPS (TTM)-0.14

Shares Outstanding59,800,053

10 Day Avg. Volume4,002,840

30 Day Avg. Volume2,982,653

Financial Highlights & Ratios

PEG Ratio0.05

Price to Book (P/B)4.04

Price to Sales (P/S)1.46

P/FCF Ratio21.36

Enterprise Value/Market Cap0.82

Enterprise Value/Revenue1.78

Enterprise Value/Gross Profit11.59

Enterprise Value/Ebitda-8.41

Forecast

1Y Price Target

$33.71

Price Target Upside-16.56% Downside

Rating ConsensusHold

Number of Analyst Covering17

EPS Forecast (FY)0.05

Revenue Forecast (FY)$1.38B

SolarEdge Technologies Business Overview & Revenue Model

Company DescriptionSolarEdge Technologies, Inc., together with its subsidiaries, designs, develops, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations worldwide. It operates through five segments: Solar, Energy Storage, e-Mobility, Critical Power, and Automation Machines. The company offers inverters, power optimizers, communication devices, and smart energy management solutions used in residential, commercial, and small utility-scale solar installations; and a cloud-based monitoring platform that collects and processes information from the power optimizers and inverters, as well as monitors and manages the solar PV system. It also provides residential, commercial, and large scale PV, energy storage and backup, electric vehicle charging, and home energy management solutions, as well as grid services; and e-Mobility, automation machines, lithium-ion cells and battery packs, and uninterrupted power supply solutions, as well as virtual power plants, which helps to manage the load on the grid and grid stability. In addition, the company offers pre-sales support, ongoing trainings, and technical support and after installation services. The company sells its products to the providers of solar PV systems; and solar installers and distributors, electrical equipment wholesalers, and PV module manufacturers, as well as engineering, procurement, and construction firms. SolarEdge Technologies, Inc. was founded in 2006 and is headquartered in Herzliya, Israel.

How the Company Makes MoneySolarEdge generates revenue primarily through the sale of its solar inverters, power optimizers, and energy storage systems, which are essential components of solar energy installations. The company's revenue model relies on direct sales to installers and distributors, as well as partnerships with solar project developers and engineering firms. Additionally, SolarEdge benefits from recurring revenue through its monitoring services, which provide ongoing performance insights for installed solar systems. Significant partnerships with leading solar manufacturers and the expansion into energy storage and electric vehicle (EV) charging solutions also contribute to its earnings, positioning the company to capitalize on the growing demand for renewable energy technologies.

SolarEdge Technologies Key Performance Indicators (KPIs)

Any

Optimizers Shipped

Optimizers Shipped
Measures the quantity of optimizers distributed, showcasing the adoption of technology that enhances solar panel efficiency and the company's innovation in solar energy management.

Chart InsightsSolarEdge Technologies has experienced a significant decline in optimizers shipped since 2023, reflecting operational challenges and market dynamics. Despite recent improvements in gross margins and positive cash flow expectations, the company faces ongoing operating losses and European market weaknesses. The strategic focus on the U.S. market, supported by the One Big Beautiful Bill Act and new partnerships, may help stabilize shipments. However, the sharp drop in shipments highlights potential risks in execution and market demand that investors should monitor closely.

Data provided by:

The Fly

SolarEdge Technologies Earnings Call Summary

Earnings Call Date:Feb 18, 2026

(Q4-2025)

% Change Since: |

Next Earnings Date:May 04, 2026

Earnings Call Sentiment Positive

The call emphasized a clear and measurable financial turnaround in 2025 — strong Q4 revenue growth (+70% YoY), consecutive quarterly margin expansion (Q4 gross margin 23.3%), and a full-year free cash flow recovery (+$77M vs -$421M in 2024). Management highlighted market-share gains, successful product initiatives (Single SKU, Nexis), continued U.S. manufacturing ramp and a large long-term AI data center opportunity. Notable near-term headwinds and execution items include one-time charges (~$60M Kokam expense), residual non-GAAP losses, inventory build to support Nexis, currency pressure from a stronger ILS, a still-slow European market and multi-year uncertainty around SST commercialization. Overall, the positives (revenue and margin momentum, cash-flow turnaround, product and market positioning) materially outweigh the lowlights, though execution risk remains on longer-term initiatives.

Q4-2025 Updates

Positive Updates

Q4 Revenue Surge

Non-GAAP Q4 revenue of $334M, up 70% year-over-year and slightly down quarter-over-quarter, outperforming the typical seasonal decline (normally -10% to -15%).

Full-Year Revenue Growth and Turnaround

2025 revenue grew 30% year-over-year; company describes 2025 as a successful stabilization year and the first step in its turnaround.

Gross Margin Expansion

Non-GAAP gross margin expanded to 23.3% in Q4 from 18.8% in Q3 (increase of ~4.5 percentage points), marking the fifth consecutive quarter of margin expansion and a recovery from negative margins in 2024 to ~23% in Q4 2025.

Free Cash Flow Turnaround

Generated $43M of free cash flow in Q4 and $77M for full-year 2025 versus negative $421M in 2024 — a swing of approximately $498M year-over-year.

Operating and Net Loss Improvements

Non-GAAP operating loss improved to $11.0M in Q4 from $23.8M in Q3 (reduction of ~53.8% QoQ). Non-GAAP net loss improved to $8.2M ($0.14/share) from $18.3M ($0.31/share) in Q3 (reduction of ~55% QoQ).

Strong Cash Position

Cash and equivalents of approximately $581M as of Dec 31, 2025, up ~$34M in Q4 (driven by the $43M quarterly free cash flow and working capital discipline).

Market Share Gains and Battery Momentum

Increased U.S. market share across residential, commercial and storage; became #2 supplier for residential batteries in the U.S. in Q3 2025. Company reported U.S. revenues of $198M (59% of sales).

Product Innovation and Nexis Rollout

Launched Single SKU concept and began shipping initial units of the Nexis platform (launch event March 19, 2026 in Germany). Nexis highlighted for lighter footprint, modularity, improved install/commissioning times, serviceability and industry-leading 185A LRA for U.S. batteries.

U.S. Manufacturing Progress

Continued ramp of U.S. manufacturing, serving domestic demand and starting exports late in the year; U.S.-made product mix cited as a driver of higher Q4 gross margin.

AI Data Center Opportunity

Identified multi-billion-dollar addressable opportunity targeting 800V DC AI data center architecture; developing a solid-state transformer (SST) topology to convert 34.5kV to 800V DC with >99% efficiency, engaging ecosystem partners and customers with expected revenue not before 2027 (industry ramp 2028).

Negative Updates

One-Time Charges and Portfolio Actions

Recorded a one-time noncash finance expense of ~ $60M related to closure of Kokam battery manufacturing and sold remainder of E‑Mobility business for $12M (resulting in GAAP net loss of ~ $8M). These items weighed on GAAP results.

Continued Non-GAAP Net Loss

Although improving, the company remains non-GAAP net loss positive at $8.2M in Q4; operating losses persist (non-GAAP operating loss $11.0M) despite steady improvement.

Currency Headwind (ILS Strength)

Strengthening of the Israeli New Shekel (~14% appreciation over the last 12 months) represents a meaningful headwind to operating expenses; management noted hedging but cited net impact on OpEx guidance.

Inventory Increase

Inventory rose by ~$22M in Q4 due to higher raw material procurement to support Nexis launch and increased battery demand, implying near-term working capital deployment.

Europe Market Sluggishness

Europe remains a slow market; management is clearing channel inventory and expects 2026 revenue to exceed 2025 but acknowledged weak market dynamics and mixed country-by-country outlook.

Tariffs and Ongoing Cost Pressure

Tariffs and U.S. manufacturing cost components were described as an ongoing cost of doing business. Management noted drawback mechanisms mitigate some impact but did not quantify the tariff effect in guidance.

Uncertain Timing for AI Data Center Commercialization

SST/data center solution remains early-stage: technical engagements ongoing, product qualification and pilot cycles needed; management does not expect meaningful revenue before 2027 and industry ramp not expected until 2028, introducing multi-year execution risk.

Company Guidance

SolarEdge guided Q1 2026 revenues of $290–$320 million (midpoint reflecting a better‑than‑normal seasonal trend and explicitly excluding any significant one‑time pull‑forward of revenue), non‑GAAP gross margin of 20%–24%, and non‑GAAP operating expenses of $88–$93 million, and said it expects to be free‑cash‑flow positive in Q1; management noted that if revenue growth and margin expansion continue they are “on target” for EBIT profitability later in 2026. For context they reported Q4 non‑GAAP revenue of $334 million (up 70% year‑over‑year), Q4 non‑GAAP gross margin of 23.3%, Q4 free cash flow of ~$43 million and FY‑2025 free cash flow of ~$77 million (vs. ‑$421 million in 2024), Q4 non‑GAAP operating loss of $11 million and non‑GAAP net loss of $8.2 million (‑$0.14/sh), cash & equivalents of ~$581 million (12/31/25), and a Q4 revenue mix of US $198M (59%), Europe $99M (30%) and International $37M (11%); management also cited sales mix shifts (more U.S.‑made products), single‑SKU and supply‑chain actions as drivers to help achieve the guided margins.

SolarEdge Technologies Financial Statement Overview

Summary

Results show stabilization off a severe 2024 downturn: 2025 revenue rebounded and gross margin turned positive again, debt was reduced, and operating/free cash flow swung to positive. However, profitability remains meaningfully negative and the equity base has been pressured, keeping overall financial quality mixed despite the improving trajectory.

Income Statement

Negative

Profitability has deteriorated sharply versus the company’s earlier profile. After positive margins in 2020–2023, 2024 saw a severe collapse with negative gross profit and very large operating and net losses, and while 2025 revenue rebounded (+16.1% YoY) and gross margin turned positive again (~16.6%), the business remained meaningfully loss-making (net margin ~-34%). Overall, revenue is volatile and earnings power is currently weak despite signs of stabilization off the 2024 trough.

Balance Sheet

Neutral

Leverage and equity resilience are mixed. Total debt has come down materially from 2024 to 2025 ($757M to $423M) and debt is now roughly in line with equity ($427M), which is an improvement. However, equity has fallen dramatically from 2022–2023 levels, reflecting the recent heavy losses, and returns to shareholders are deeply negative in 2024. The balance sheet is no longer highly levered, but the reduced equity cushion increases risk if losses persist.

Cash Flow

Neutral

Cash generation improved notably in 2025, with positive operating cash flow ($104M) and positive free cash flow ($81M), a sharp swing from 2024’s large cash burn. That said, cash flow has been inconsistent over the cycle (negative operating cash flow in 2023–2024 and negative free cash flow in 2022–2024), suggesting working-capital and/or profitability sensitivity. Current momentum is constructive, but durability remains a key watch item.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.18B	901.46M	2.98B	3.11B	1.96B
Gross Profit	181.59M	-877.20M	703.82M	844.65M	629.32M
EBITDA	-286.82M	-1.64B	142.49M	231.28M	230.27M
Net Income	-405.45M	-1.81B	34.33M	93.78M	169.17M
Balance Sheet
Total Assets	2.18B	2.63B	4.59B	4.27B	2.90B
Cash, Cash Equivalents and Short-Term Investments	577.94M	585.89M	860.04M	1.02B	697.82M
Total Debt	423.42M	757.35M	732.05M	735.54M	713.83M
Total Liabilities	1.75B	1.97B	2.18B	2.09B	1.59B
Stockholders Equity	427.46M	658.34M	2.41B	2.18B	1.31B
Cash Flow
Free Cash Flow	80.79M	-421.48M	-350.64M	-138.06M	64.88M
Operating Cash Flow	104.26M	-313.32M	-180.11M	31.28M	214.13M
Investing Cash Flow	379.88M	416.29M	-268.89M	-417.04M	-484.21M
Financing Cash Flow	-348.89M	-20.13M	-11.96M	654.61M	-15.18M

SolarEdge Technologies Technical Analysis

Technical Analysis Sentiment

Positive

Last Price40.40

Price Trends

50DMA

33.49

Positive

100DMA

34.75

Positive

200DMA

30.52

Positive

Market Momentum

MACD

1.99

Negative

RSI

60.57

Neutral

STOCH

83.01

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SEDG, the sentiment is Positive. The current price of 40.4 is above the 20-day moving average (MA) of 36.05, above the 50-day MA of 33.49, and above the 200-day MA of 30.52, indicating a bullish trend. The MACD of 1.99 indicates Negative momentum. The RSI at 60.57 is Neutral, neither overbought nor oversold. The STOCH value of 83.01 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SEDG.

SolarEdge Technologies Risk Analysis

SolarEdge Technologies disclosed 3 risk factors in its most recent earnings report. SolarEdge Technologies reported the most risks in the "Legal & Regulatory" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

SolarEdge Technologies Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ENPH	62 Neutral	$6.52B	37.57	17.93%	―	20.97%	226.98%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
JKS	61 Neutral	$1.38B	-2.98	-17.96%	10.19%	-34.29%	-732.90%
SEDG	60 Neutral	$2.58B	-6.17	-74.68%	―	-0.14%	66.71%
SHLS	58 Neutral	$1.14B	34.37	5.80%	―	2.68%	2.90%
ARRY	52 Neutral	$1.64B	―	-19.02%	―	35.75%	37.97%
CSIQ	45 Neutral	$1.43B	84.78	0.56%	―	-4.46%	1645.26%

* Technology Sector Average

Performance Comparison

SEDG

SolarEdge Technologies

35.40

18.91

114.68%

CSIQ

Canadian Solar

17.71

7.66

76.22%

ENPH

Enphase Energy

42.27

-15.06

-26.27%

JKS

JinkoSolar

25.29

4.10

19.33%

ARRY

Array Technologies

7.58

2.30

43.56%

SHLS

Shoals Technologies Group

5.93

2.90

95.71%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Feb 19, 2026