The Undervalued Solar Stock Power America’s Future

First Solar (NASDAQ: FSLR) harnesses cutting-edge solar technology to fuel utility-scale projects, cementing its leadership in the renewable energy surge and offering tech investors a chance to shine bright in the AI-driven power boom even as macro headwinds push solar stocks downward. 

With a U.S.-centric production and proprietary thin-film tech, this $15.5 billion market cap titan sidesteps China’s solar dominance, delivering robust growth. Backed by a solid balance sheet and government incentives, First Solar’s poised to dominate the $200 billion solar market, lighting a path to blockbuster returns.

AI-Driven Power Demand Fuels Solar Surge

Data centers powering AI are guzzling electricity, with demand projected to hit 945 TWh by 2030, driving a 15% CAGR in the $200 billion solar market. U.S. manufacturing reshoring, spurred by Trump’s tariffs, boosts industrial power needs. 

Policy risks, like the One Big Beautiful Bill’s (OBBBA) investment tax credit (ITC) phase-down from 60% in 2026 to 0% in 2028 and general inflation, could curb project financing. 

Solar’s cost advantage, at $30/MWh versus $50/MWh for gas, aligns with First Solar’s low-cost tech. Grid bottlenecks, delaying 31 GW of 2024 connections, pose risks, but First Solar’s 55% U.S. production share by 2026 positions it to meet AI and industrial demand. 

Operational Overview and Recent Earnings

First Solar is leading the GreenTech charge, designing and manufacturing utility-scale cadmium telluride (CdTe) thin-film modules, with 14 GW of U.S. capacity by 2026. In Q1 2025, revenue grew 6% to $845 million, driven by demand for its Series 6 Plus and Series 7 TR1 modules, though net income dipped 11% to $209.5 million due to 22% higher R&D costs. 

Fiscal 2024 saw revenue soar 27% to $4.2 billion, with net income up 56% to $1.3 billion, yielding a 30% margin, far outpacing peers like JinkoSolar’s 2% margin. Gross margins hit 45%, up from 3% in 2022, boosted by Section 45X credits. 

A 66.3 GW backlog, down 15% from Q1 2024, reflects policy uncertainty, but 81 GW in potential bookings signals resilience.

Strategic Positioning and Competitive Advantage 

FSLR’s CdTe thin-film tech, bypassing China’s silicon supply, delivers 97% yield for Series 6 and 96% for Series 7, outpacing JinkoSolar’s 94% yield. A $400 million R&D budget, 10% of revenue, drives efficiency gains, cutting costs per watt by 5% yearly. 

With 14 GW of U.S. capacity by 2026, up from 6.5 GW, First Solar’s Alabama and Louisiana plants cement its 55% domestic market share. OBBBA’s FEOC rules favor its U.S.-centric supply chain, unlike Enphase’s reliance on Asian imports. 

Contracts with hyperscalers like Microsoft, securing 10.5 GW and a 65 GW backlog lock in stickiness. First Solar’s scale and tech edge keep it ahead of global rivals. 

Bear Case

• Policy shifts could choke post-2027 demand. 

• Rising financing costs might compress margins. 

• Grid interconnection delays could stall projects. 

• Chinese oversupply could pressure prices. 

• Labor shortages might hinder expansion. 

• Tariff hikes could raise input costs.

First Solar’s Bright Spark Lights Tech Gains

First Solar’s poised to shine, with management eyeing 25 GW of annual production by 2026, fueled by AI-driven power needs. Revenue is forecast to grow 10% annually through 2029, supported by $900 million in cash and Section 45X credits through 2029. EBITDA margins, at 45% in 2024, should hold steady, with normalized EPS projected at $22.5 by 2026. 

OBBBA’s ITC phase-down could dent post-2027 demand, but transferability and commencement-based eligibility preserve near-term project viability. 

An 81 GW booking pipeline, up from 72.8 GW, signals growth, though a 78% drop in Q1 2025 net bookings to 0.6 GW reflects policy caution. 

Ultimately, First Solar’s domestic focus and tariff insulation position it to capture market share as weaker rivals exit while a 55% U.S. market share and hyperscaler deals ensure continued strength even if near-term headwinds persist.