Shares of Enphase Energy (ENPH) tumbled 8.14% in Tuesday's after-hours trading session, despite the company reporting better-than-expected second-quarter results. The sharp decline was primarily driven by weak third-quarter revenue guidance, raising concerns about slowing growth in the solar industry.

For the second quarter of 2025, Enphase reported adjusted earnings per share of $0.69, surpassing the analyst estimate of $0.62. Revenue came in at $363.2 million, also beating the expected $359.6 million. However, the company's outlook for the third quarter fell short of market expectations, with projected revenue between $330 million and $370 million, below the consensus estimate of around $370 million.

Adding to investor concerns, Enphase management noted that tariffs had a 2% negative impact on its gross margin in Q2, which came in at 48.6%. The company forecasts a further decline in gross margin for Q3, projecting a range of 41% to 44%. This outlook reflects ongoing challenges in the solar energy sector, including the impact of import tariffs and uncertainty surrounding tax credits for renewable energy projects. The recent Senate budget bill, which reduces access to solar and wind power tax credits, has cast a shadow over the industry's near-term prospects.