We recently published a list of the 11 Best Solar Energy Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where SolarEdge Technologies, Inc. (NASDAQ:SEDG) stands against other best solar stocks.
The overall energy industry has fallen by almost 8% since the beginning of the year, weighed down by the slump in crude oil prices and the prospects of a global economic slowdown. On the other hand, the clean energy sector has largely remained flat, posting YTD gains of 0.6% at the time of writing this piece.
Solar energy has emerged as a leading candidate in the current global ‘green transition’, thanks in large part to its cost, reliability, availability of supply chain, and speed of construction. Moreover, a significant increase in battery power over the last few years and reductions in battery costs have helped drive solar power’s growth by delivering firm power even during early morning and evening peak power conditions.
So it doesn’t come as a surprise that the United States installed a record-breaking 50 gigawatts (GW) of new solar capacity in 2024, the largest single year of new capacity added to the grid by any energy technology in over twenty years. Moreover, a recent report by Wood Mackenzie and the Solar Energy Industries Association revealed that solar and storage accounted for 84% of all new electric generating capacity added to the grid last year.
A significant growth opportunity for the sector has emerged in the form of the ongoing AI boom and its accompanying data centers. According to a study by the American Clean Power Association, electricity demand in the US is expected to surge by 35-50% by 2040, driven by domestic manufacturing growth, data centers, and mass electrification. Solar power is a primary candidate to fill this supply gap, since it can be built faster and more affordably than any other technology.
That said, the rapidly expanding sector has suffered a serious setback since the beginning of the year, primarily due to President Trump’s global trade war and his reversal of the Biden-era energy and climate policies. The current administration wants to refocus efforts on the fossil fuel sector, while conservatives push Congress to wipe out tax incentives for clean energy. As a result, over half of the nearly $30 billion in clean technology factories that were scheduled to come online this year — including manufacturing facilities for solar, wind, batteries, and electric vehicles — are now predicted to face delays or cancellations, according to a report by BloombergNEF.
Solar investors are also fretting about the increasing uncertainty amidst the global tariff war, as the majority of US solar panel imports were coming from Southeast Asian countries like Thailand, Malaysia, and Vietnam. While the President has imposed a 90-day pause on imposing reciprocal levies, it is clear that no country is safe from his tariffs. However, this troublesome geoeconomic landscape has granted a significant advantage to companies that are manufacturing domestically. However, they still must import parts, increasing their costs.
To give an example of how tariffs can impact the industry, let us remember Donald Trump’s last tenure as president, when he imposed a 30% tariff on imported solar cells and panels in 2018. This policy led the country’s renewable energy companies to cancel or freeze investments of over $2.5 billion in large-scale installation projects, resulting in thousands of lost jobs.
A technician installing a communication device in a large solar energy system.
Our Methodology
To collect data for this article, we scanned Insider Monkey’s database of 1,009 hedge funds and picked the top 11 companies operating in the solar energy sector with the highest number of hedge fund investors in Q4 2024. When two or more companies had the same number of hedge funds investing in them, we ranked them by their market cap as of the writing of this piece. The following are the Best Solar Energy Stocks According to Hedge Funds.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
SolarEdge Technologies, Inc. (NASDAQ:SEDG)
No. of Hedge Fund Holders: 30
SolarEdge Technologies, Inc. (NASDAQ:SEDG) designs, develops, manufactures, and sells direct current optimized inverter systems for solar photovoltaic installations in the United States, Germany, the Netherlands, Italy, the rest of Europe, and internationally.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) had a mixed Q4 2024 as its revenue of $196.22 million beat expectations by $7 million, despite being down by almost 38% YoY. However, the company’s adjusted EPS of -$3.52 fell below estimates by $1.86. SEDG’s reported cash used in operating activities came in at $313.3 million in 2024, compared to $180.1 million used in the prior year. That said, its free cash flow deficit for the year was reported at $421.5 million.
To drive a turnaround in performance, SolarEdge Technologies, Inc. (NASDAQ:SEDG) has identified four key priorities – strengthening its financials, regaining market share, accelerating innovation, and ramping up US manufacturing. As part of its cost-cutting measures, the company reduced its workforce by approximately 400 employees worldwide. It has revealed intentions to take further steps to rationalize its cost structure by focusing on core projects, concentrating our global footprint on profitable markets, and exiting non-strategic markets and product lines. Moreover, SEDG is now manufacturing inverters, optimizers, and batteries in the US, putting it at a significant advantage in the current geoeconomic landscape.
Overall, SEDG ranks 8th on our list of the best solar energy stocks to buy according to hedge funds. While we acknowledge the potential of SEDG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than SEDG but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
