SolarEdge published its second-quarter report on 5 August 2026. We are writing about it today, 6 August.
And it is one of those cases where the report and the reaction to it look like they concern two different companies.
What was reported
- Revenue of $346.2 million - growth of 20%
- The sixth consecutive quarter of year-over-year gross margin expansion
- A return to non-GAAP operating profitability - the first time since the second quarter of 2023
- Positive free cash flow
CEO Shuki Nir: "Our second-quarter results mark an important milestone in SolarEdge's turnaround. Revenue grew 20% year over year, GAAP operating loss narrowed significantly, and we returned to non-GAAP operating profitability for the first time since the second quarter of 2023."
And where the growth came from: "Strong demand in Europe combined with strength in U.S. C&I, more than offset industry-wide softness in U.S. residential."
And yet the stock fell 30.48% the same day - from $48.76 to $33.90.
Why
The guidance points down, not to continued growth
Third-quarter guidance: $310 million to $340 million.
The midpoint - $325 million - is roughly 6% below the $346.2 million the company had just reported.
So after a quarter of 20% growth, the company is guiding to a smaller one.
The rest of the guidance: non-GAAP gross margin of 22% to 26%, and non-GAAP operating expenses of $86 to $91 million.
And the sentence worth reading twice
The guided profitability depends on tariff refunds
The release states explicitly that the third-quarter guidance:
does not include any significant pull-forward of revenue and excludes potential IEEPA refunds in the third quarter. When including the $11.5 million of IEEPA refunds we received in July, the midpoint of our guidance implies a non-GAAP operating profit in the third quarter.
Read that again: only when including the tariff refunds does the guidance midpoint imply an operating profit.
Without them - it does not.
Meaning the return to profitability, which is the central message of the report, is not guaranteed to continue next quarter on the strength of the business itself.
And that is exactly the line we saw this week at Caterpillar, which booked $392 million of IEEPA refunds inside operating profit - roughly 1.9 percentage points of its margin. Two companies in one week whose reported profitability leans partly on tariff refunds.
And the detail almost nobody noticed
**In the same release SolarEdge notes it continues to scale the Nexis platform in its core markets, and to advance the SolarEdge SST to address - in its words - "the significant opportunity in AI factories".
Meaning an Israeli solar energy company is now aiming at data centers too.
And that joins a week in which Caterpillar attributed its power generation growth to data centers, Tower reported a surge in silicon photonics, and TeraWulf signed a $19 billion contract with Anthropic.
When companies from four different industries point at the same place, it is no longer coincidence.
My Angle
A personal opinion of Ilan Abramov - not advice, not a recommendation
This is exactly the kind of report that teaches why you cannot read only the headline - in both directions.
The first direction: anyone who read "returned to profitability for the first time since 2023" and concluded the stock would rise was wrong by 30%. The second: anyone seeing a stock down 30% and concluding the quarter was a disaster is also wrong. The quarter was good. The guidance was not.
And what troubles me here is not the fall but the sentence about tariffs. A company writing that its guidance midpoint implies an operating profit only when including $11.5 million of refunds is saying, in effect, that the business itself is not yet operationally profitable at the guided revenue level.
That is disclosure worth respecting - the company did not hide it. But it also says something clear about the distance still to go.
And what I take into the wider thesis: this is the second company this week whose profitability touches IEEPA refunds. After Caterpillar. If that turns out to be a broad pattern, it means part of American industry's 2026 profit line reflects a tariff refund rather than the business - and that is a line which will disappear.
