Enphase Energy reported better-than-expected Q1 earnings on Tuesday, but the numbers underneath the headline weren’t pretty. The stock dropped around 11% on Wednesday as investors focused on falling margins, a weak Q2 forecast, and a core business under real pressure.
The company posted EPS of $0.47, beating the $0.43 consensus. Revenue came in at $282.9 million, just above the $282.25 million estimate. But revenue was down 20.6% compared to the same quarter last year, and Q1 2025 EPS had been $0.68 — a sharp drop year over year.
$ENPH is a perfect example of this market:
Beating earnings isn’t enough anymore.
Revenue missed → analysts cut → stock drops
But here’s the twist:
Calls are piling in
Short interest is highCrowded trade forming
https://t.co/CfE9vJcwYQ
— Schaeffer's Investment Research (@schaeffers) April 29, 2026
The main culprit is the U.S. residential solar market. Changes to federal tax legislation removed a key incentive for homeowners buying solar systems outright. Before the change, a standard $20,000 installation could save a homeowner $6,000 in federal taxes. That benefit is now gone for direct purchases.
Enphase CEO Badri Kothandaraman acknowledged the pressure directly. “The fact is the core revenue is a little bit under stress,” he told Barron’s.
U.S. sales fell 23% year over year as a result. Enphase is pushing a workaround — leasing panels or selling power through a third party, which still qualifies for subsidies. But analysts aren’t convinced it’ll be enough to turn things around quickly.
William Blair analyst Jed Dorsheimer wrote that the company faces “larger demand issues compounding the financing complexity.” He added that residential solar demand remains “highly subsidy-dependent and less economically resilient absent policy support.”
Kothandaraman pointed to Europe as a bright spot. Ongoing energy concerns linked to the war in Iran are pushing more Europeans toward solar. “Europeans want energy security,” he said.
But Europe is still a small piece of Enphase’s overall business. The U.S. remains the dominant market, so European growth doesn’t meaningfully offset the domestic decline right now.
Enphase also announced it’s developing equipment for the data center market — specifically a solid-state transformer platform that converts medium-voltage AC power directly to low-voltage DC. Data centers are increasingly moving toward DC systems for efficiency reasons, a shift Nvidia and others are encouraging.
It’s a real opportunity on paper. But Wall Street isn’t ready to price it in yet. Dorsheimer called the new business line “not a near-term catalyst,” and the market appears to agree.
With dozens of companies chasing data center contracts, investors are likely to wait until Enphase can show actual sales numbers before assigning value to the new segment.
On the analyst front, Wells Fargo cut its price target from $50 to $45 but kept an “overweight” rating. Barclays sits at $31 with an “underweight.” Morgan Stanley also holds an “underweight” at $30. The stock’s consensus rating is “Hold” with an average target of $41.20.
ENPH traded around $30.63 on Wednesday, well below its 50-day moving average of $39.37. The stock hit a 52-week low of $25.77 earlier this year and a high of $54.43.
The company’s market cap sits at approximately $4.04 billion. Institutional investors hold 72.12% of the stock.
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