What Happened?

Shares of solar power systems company SolarEdge (NASDAQ:SEDG) fell 22.3% in the morning session after the company reported underwhelming third-quarter earnings. Its revenue guidance for the next quarter missed, and its revenue fell short of Wall Street's estimates. Notably, the company wrote down $612 million in inventory, reflecting lowered demand, particularly in Europe. As a result, SolarEdge implemented price cuts and promotional discounts to compete in this market, which is likely to result in a shortfall in its margins. Lastly, the company called out seasonal weakness heading into the winter. Overall, this was a challenging quarter for the business, with little reasons for investors to stay positive.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy SolarEdge? Access our full analysis report here, it’s free.

What The Market Is Telling Us

SolarEdge’s shares are extremely volatile and have had 65 moves greater than 5% over the last year. But moves this big are rare even for SolarEdge and indicate this news significantly impacted the market’s perception of the business.

SolarEdge is down 83.8% since the beginning of the year, and at $14.83 per share, it is trading 85.5% below its 52-week high of $102.24 from December 2023. Investors who bought $1,000 worth of SolarEdge’s shares 5 years ago would now be looking at an investment worth $185.61.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefitting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.