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Investing.com -- Goldman Sachs cut Enphase Energy (NASDAQ:ENPH) to Sell and lowered SolarEdge Technologies (NASDAQ:SEDG) to Neutral, warning that an earlier‑than‑expected phase‑out of residential solar tax credits could sap demand and squeeze margins across the industry.
The bank said President Donald Trump’s newly passed budget bill accelerates the expiry of key incentives.
The 25D investment tax credit ( ITC (NSE:ITC)) for homeowners now ends in 2026, while the 48E credit for third‑party‑owned systems runs out after 2027, timelines described as “meaningfully worse” than those laid out in May.
Analysts estimate fewer than half of U.S. households will save money with rooftop panels once the credits disappear, undermining what has been the sector’s main selling point.
“Simply put, we estimate less than half the U.S. market will be in the money when it comes to saving via residential solar,” the note said.
Goldman expects installers and consumers to gravitate toward cheaper hardware to offset weaker economics, putting Enphase’s premium micro‑inverter margins at risk.
It also sees the company ceding market share as price becomes the primary differentiator.
By contrast, the downgrade of SolarEdge stems chiefly from valuation. The stock has more than doubled since Goldman added it to its Americas buy list in December 2024, leaving less room for upside as policy headwinds build.
The bank trimmed forecasts for both companies and revised its broader solar supply‑demand model to reflect softer U.S. growth.
It also highlighted recent volatility in residential‑solar shares as successive drafts of the tax bill moved through Congress, noting that the final legislation was “worse than many feared” for the niche market.