Earnings

Enphase Sees A Billion-Dollar AI Data Center Business By 2030 While U.S. Solar Demand Stays Weak

The CEO pitched five growth drivers, led by a data center transformer, and said there is no meaningful U.S. demand recovery.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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Enphase Sees A Billion-Dollar AI Data Center Business By 2030 While U.S. Solar Demand Stays Weak

Enphase Energy Chief Executive Officer Badri Kothandaraman said on the company's third-quarter earnings call Tuesday that its solid-state transformer for AI data centers has the potential to become a billion-dollar annual revenue business by 2030. In the same remarks he said the company is "not seeing any meaningful recovery in the U.S. demand."

A transformer bet on AI power

Enphase, which designs and sells home energy systems built around solar microinverters and batteries, calls the product IQSST. It is designed to convert 13.8 kV or 34.5 kV medium-voltage AC directly into 800 VDC, with a targeted efficiency of about 98.5%.

Kothandaraman said customer pilots are on track for 2027 and initial commercial shipments for 2028. The pipeline has grown since July to more than 50 potential customers, including a hyperscaler and a global AI computing leader for which the company is developing specific solutions.

Chief Products Officer Raghu Belur, answering a JPMorgan analyst on how the billion-dollar figure was built, said Enphase had earlier cited a market of 11 gigawatts by 2030, which he called very conservative. One hyperscaler, he said, is talking about tens of gigawatts, so the market could run from 11 to 30 gigawatts or more. The company took an assumed reasonable market share at what it considers the right price and arrived at the billion-dollar number.

Belur said all development and intellectual property is Enphase's own. Asked by a Bernstein analyst whether the hyperscaler commitments involve funded development, he said talks are being kept more technology focused for now, though business discussions are under way.

Demonstrations and a compliance path

Enphase demonstrated 13.8 kV AC to 800 VDC conversion in its Austin lab, a milestone announced Tuesday. Kothandaraman said 34.5 kV capability will follow in the fourth quarter, along with megawatt-scale full-system demonstrations this quarter in Austin and at a national lab, with customers taking part.

Belur said the company hopes to get through compliance in the first half of the year and enter pilots in the second half, with commercial production near the end of the year and into early 2028. He cautioned that some UL standards are still at an outline-of-investigation stage. The company also announced a joint development with Infineon on gallium nitride switch devices for such transformers on Monday.

A weak core market

Third-quarter revenue was $293.3 million, including $85 million of safe harbor revenue. Global sell-through rose 1% from the second quarter, well short of the roughly 10% growth the company had expected. U.S. sell-through fell 35% from a year earlier, which Kothandaraman tied to higher interest rates and the end of the 25D tax credit.

For the fourth quarter, Enphase guided to revenue of $225 million to $255 million, including about $51.2 million of safe harbor revenue, and said it plans to ship about $20 million below sell-through to cut channel inventory.

Kothandaraman named four other growth drivers: residential batteries, which he expects to grow about 50% in 2027 from roughly 450 megawatt hours in 2026; the Propel prepaid lease program; commercial solar and storage; and bidirectional EV charging. While not guiding for 2027, he described a framework of about $200 million a quarter of core revenue plus roughly $200 million from the growth drivers.

Kothandaraman said the five drivers have the potential to more than double the size of the company over time.

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