SolarEdge’s Bold Dual Strategy: Powering Up with Solar and AI Data Centers

SolarEdge Technologies has captured market attention with an unexpected two-pronged approach that signals potential transformation for the solar energy specialist. The company is simultaneously demonstrating renewed strength in its core solar business while making a strategic leap into the rapidly expanding artificial intelligence data center sector—a move that could potentially reverse its recent challenges.

The solar technology firm delivered third-quarter 2025 financial results that substantially outperformed analyst expectations. SolarEdge reported an adjusted loss of $0.31 per share, notably better than the projected losses ranging between $0.38 and $0.43 per share. More impressively, revenue surged to $340.2 million, representing a 44.5 percent year-over-year increase.

Operational improvements became clearly visible through enhanced efficiency metrics. The company achieved an 18.8 percent gross margin and generated positive free cash flow of $22.8 million, indicating stronger financial health. Additionally, SolarEdge reclaimed its leadership position in the U.S. residential inverter market during the second quarter, marking a significant recovery in its domestic territory.

Strategic Partnership with Infineon

Perhaps the most surprising development emerged from a newly announced collaboration with German semiconductor leader Infineon. The partnership aims to develop solid-state transformers specifically designed for AI and hyperscale data center applications.

Should investors sell immediately? Or is it worth buying SolarEdge?

This technology promises exceptional efficiency, converting medium voltage to direct current with over 99 percent effectiveness. For SolarEdge, this venture represents entry into the lucrative data center power market—a strategic diversification move as the traditional solar sector faces ongoing headwinds.

Market Reaction and Analyst Sentiment

Investors responded enthusiastically to these developments, driving shares upward in a dramatic rally that saw the stock advance nearly 29 percent at its peak, with momentum continuing through Friday's trading session.

Despite this market enthusiasm, financial analysts maintain a cautious stance. Several prominent firms, including BMO Capital and Jefferies, have retained their "underperform" ratings on SolarEdge shares, though they've modestly increased their price targets. The average price target among analysts remains significantly below current trading levels, reflecting persistent concerns about the company's ability to sustain profitability.

The coming months will reveal whether SolarEdge's dual focus on solar technology and data center power solutions can convince skeptical market observers. All eyes now turn to February's quarterly results, which should indicate whether this combined solar and AI power strategy can deliver lasting momentum.