Movement perpendicular to and away from the earth will convert to potential gravitational energy, which is then released when the ball moves back towards the earth.

In addition, you're assuming that the balls are passive participants. In actuality, from the waves perspective, they are actively resisting being lifted, and actively attempting to fall, limited by their buoyancy in the water. When the wave causes the water to fall away from the balls, they are falling into the water on that trailing edge.

Finally, conservation of energy dictates that that energy does not just disappear. If the energy goes into the ball as movement, something has to stop that movement. That something is going to be either gravity if moving up, or the water itself in any other direction. So the energy is moving from the water, into the ball, back into the water as it resists the ball displacing it to move.