It’s been a very volatile period for US-based solar company First Solar, having rallied significantly on the expectation that AI will drive huge demand for their industrial solar applications in coming years, thanks to a very bullish piece written by UBS (we covered here). The rally from below $US200 was aggressive, and now the pullback has been equally sharp, with Joe Biden’s dismal performance in the first debate the main reason. First Solar has benefitted from Biden’s Inflation Reduction Act which incentivises US manufacturing, with Trump calling the scheme the “green new scam”. This raised concerns about a Trump victory’s impact on renewable energy stocks.
There is no doubt that the stock performance this year (up ~50%) has been driven in part by regulatory tailwinds (tax breaks), however, strong demand for renewable energy is evident with their order book full as they expand capacity in Ohio and other states to over 25 GW by 2026. With a full order book and a solid backlog of bookings for several years to come, this provides revenue and margin visibility. Their recent earnings report was also very positive and ahead of expectations.
- While a Trump victory is a risk for renewable stocks, we believe that FSLR remains well placed over the coming years to take advantage of the intersection between increased energy use from AI and the global push for net zero.
MM remains bullish FSLR US
Add To Hit List
