German solar-inverter maker SMA Solar has raised the lower end of its 2026 profit forecast, citing resilient rooftop demand and growing opportunities in battery storage for data centers. The company now expects earnings before interest, taxes, depreciation, and amortization (EBITDA) of €205 million to €230 million for 2026, up from a previous floor of €200 million.
The update, reported by Reuters, comes after a third quarter in which demand for rooftop solar systems held up better than many in the industry had feared. That resilience is notable given the broader headwinds facing the solar sector, including high interest rates, policy uncertainty, and intense competition from Chinese manufacturers.
What SMA Solar does
SMA Solar is one of the world's largest makers of solar inverters—the devices that convert the direct current (DC) electricity generated by solar panels into the alternating current (AC) used by homes and businesses. Inverters are a critical component of any solar installation, and their sales are a bellwether for the health of the solar industry.
The company sells to residential, commercial, and utility-scale customers. Its products range from small rooftop inverters for homes to large central inverters for solar farms. The company has been through a turbulent period in recent years, including a profit warning and restructuring, but has been working to cut costs and focus on higher-margin segments.
Battery storage: a new growth engine
Beyond rooftop solar, SMA Solar highlighted battery storage as a key growth area. The company said demand for battery storage systems is opening doors with data centers, which are increasingly looking for reliable, clean power to run their energy-hungry servers.
Data centers are among the fastest-growing electricity consumers globally, driven by the boom in artificial intelligence and cloud computing. That has created a surge in demand for energy storage solutions that can smooth out intermittent renewable power and provide backup. For inverter makers like SMA, this represents a natural extension of their existing technology.
This trend is not unique to SMA. Other companies in the energy and technology space are also benefiting from the data center boom. For example, Siemens Energy's record order backlog has been powered by AI data center demand, illustrating how the sector is becoming a major driver of growth for energy equipment suppliers.
What this means for investors
For everyday investors, SMA Solar's raised outlook is a positive signal for the solar industry, but it comes with caveats. The company's forecast is still below the levels it achieved in previous years, and the solar sector remains volatile.
Rooftop demand holding up is encouraging, but it is not a guarantee of a broad recovery. Many solar companies have struggled with falling panel prices and oversupply, which has squeezed margins across the supply chain. SMA's focus on inverters and storage, rather than panels themselves, may give it some insulation, but it is not immune to the industry's challenges.
The data center angle is worth watching. If battery storage for data centers becomes a meaningful revenue stream, it could provide a more stable, long-term growth driver than the cyclical rooftop market. However, this is still an emerging opportunity, and it is unclear how quickly it will translate into significant sales.
Investors should also note that SMA Solar's outlook is for 2026, not the current year. That means the company is looking beyond near-term headwinds and betting on a recovery in demand. The fact that it felt confident enough to raise the floor suggests management sees improving conditions ahead.
As with any single company update, it is important to consider the broader context. The solar industry is highly competitive, and policy support varies by region. In Europe, for example, the push for renewable energy remains strong, but bureaucratic hurdles and grid connection delays can slow adoption.
Broader market context
SMA Solar's news comes amid a mixed picture for global markets. While some sectors, like technology and energy equipment, are benefiting from the AI boom, others are facing headwinds. For instance, Inghams trimmed its 2027 profit outlook due to rising feed and freight costs, highlighting how cost pressures vary across industries.
In the UK, the FTSE 100 was set to open higher even as the UK housing outlook hit a three-year low, showing that markets can be resilient even when certain sectors struggle.
For solar investors, the key takeaway is that demand for renewable energy remains structurally strong, but the path to profitability is not always smooth. Companies that can adapt to new opportunities, like battery storage for data centers, may be better positioned than those that rely solely on traditional solar sales.
As always, it is wise to diversify and not put all your eggs in one sector. Solar and renewable energy can be a rewarding long-term investment theme, but it comes with risks, including technological change, policy shifts, and global competition.
