ENPH Stock Soars 50% on Earnings Beat-Is It a Data Center Play?

Enphase Energy (NASDAQ: ENPH) was up more than 50% in early trading on Feb. 4, the day after the company delivered its quarterly earnings for the fourth quarter. Enphase beat on the top and bottom lines, with adjusted earnings per share (EPS) coming in at 71 cents on revenue of $343.32 million. That beat expectations of 59 cents in EPS on revenue of $340.45 million.

That said, on a year-over-year (YOY) basis, revenue was down about 10%. Yet, investors are pushing the stock higher. They seem to agree with Enphase management’s optimism that the current quarter may mark a bottom for the company as tariff pressures continue to ease.

Supporting that outlook, management raised its first-quarter revenue forecast to a range of $270 million to $300 million. The prior forecast was for $250 million. Furthermore, chief executive officer (CEO) Badrinarayanan Kothandaraman announced that Enphase was nearly 90% booked to the midpoint of its revenue guidance.

At the high end of that forecast, revenue would be up approximately 13% YOY. However, if the company is correct in saying that next quarter represents the trough, then it’s easier to see why investors were enthusiastic after a mostly bullish report.

The Ace Up Enphase’s Sleeve

Investors are also paying attention to Enphase’s emerging role in using its distributed energy ecosystem to help free up grid capacity for power‑hungry data centers, an area management has highlighted as a growth opportunity.

On the earnings call, Kothandaraman explicitly tied Enphase’s long‑term R&D roadmap to the data‑center build‑out. He noted that hyperscale operators are moving toward 800‑volt DC architectures and said Enphase is evaluating next‑generation front‑end power‑conversion designs that can efficiently step medium‑voltage AC at 13.8 kV to 34.5 kV down to 800‑volt DC before power reaches AI racks.

While he stopped short of giving specific product timelines, management framed behind‑the‑meter resources and virtual power plants as a “critical evolution” of the business as data‑center demand threatens to overwhelm local grids. 

That commentary dovetails with recent remarks from Enphase’s marketing leadership, who see tech and data‑center developers subsidizing residential solar‑plus‑storage to unlock grid capacity in constrained markets. Third‑party analysis cited by the company suggests that this model could free up tens of gigawatts of effective capacity if large customers help fund distributed systems, potentially giving Enphase a new demand channel for its batteries, inverters, and emerging load‑management products.

For investors in the energy sector, this adds a longer‑duration AI and data‑center angle on top of the more traditional residential‑solar recovery thesis and helps explain why the market is willing to look through a 10% year‑over‑year revenue decline in the near term.

Beware of the Squeeze

Enphase delivered a strong report, and the stock was up about 16% for the year heading into the earnings report. That was a relief to any investor who held on through an ugly 2025.

But does it justify a 35% increase in the company’s stock price post earnings? It does if traders have to cover short positions. Short interest in ENPH stock is around 22% as of this writing. That’s not massive, but it’s significant and is certainly enough fuel to accelerate a post-earnings rally.

That said, ENPH stock is overbought after this sharp move higher. The Enphase analyst forecasts on MarketBeat show that several analysts have either upgraded ENPH stock or raised their price targets.

However, while most of the new targets are above the current consensus price of $44.53, they provide little to no upside from where the stock has bounced.

That means investors who are looking to get involved should wait for a pullback. That may happen in the next several days as some traders will look to take profits after this strong move higher.

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The article "ENPH Stock Soars 50% on Earnings Beat—Is It a Data Center Play?" first appeared on MarketBeat.