A lobbying effort rarely moves markets this much, but when some of the biggest names in technology weigh in, Wall Street listens.
Data center operators, alarmed by possible changes to renewable energy incentives, urged policymakers to hold the line.
The result was a sharp rally in solar stocks that put one U.S. manufacturer squarely back in the spotlight. Investors may be underestimating just how strong its position has become.

First Solar (NASDAQ: FSLR) is not new to the ups and downs of clean energy cycles, but Friday’s 11% surge made clear that the market sees its fundamentals differently today than in past booms and busts.
As the largest solar panel manufacturer in the Western Hemisphere, the company has built a scale advantage that few can match.
Recent second-quarter results underscored this edge: revenue reached $1.1 billion, with earnings easily topping expectations.
Gross margins came in at nearly 43% and operating margins close to 32%, numbers that most solar peers can only dream of.
Balance sheet strength further bolsters the case, with a debt-to-equity ratio of just 0.07, giving management ample flexibility to keep expanding capacity.

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Early Action Idea
Investors watching for momentum trades may find opportunities on pullbacks toward the $185–190 range.
Support at these levels has held through past dips, and the strong earnings surprise could mean buyers remain eager to step in if the stock cools from recent highs.

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Catalysts Behind the Rally
The most immediate driver was the lobbying effort from the Data Center Coalition, whose members include Amazon, Oracle, and CoreWeave.
Their message to Treasury Secretary Scott Bessent was clear: restricting clean energy incentives would slow the buildout of artificial intelligence infrastructure.
That argument resonated with markets, as AI-linked electricity demand is expected to surge in coming years.
At the same time, Wall Street analysts piled on with upgrades. GLJ Research lifted its price target to $214, Susquehanna to $222, HSBC to $250, and Goldman Sachs to $283.
UBS went even further, raising its target to $275 while reiterating a Buy rating.
These upward revisions reflect confidence not only in earnings momentum but also in First Solar’s ability to navigate shifting international tariff regimes.

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Capacity Expansion and Demand Visibility
Beyond the near-term policy debate, First Solar’s strategic growth plan is what makes the story compelling.
The company has just launched operations at its fourth U.S. manufacturing facility, with a fifth on the way in the second half of 2025.
By the end of 2026, management expects total annual capacity to surpass 25 gigawatts.
Future demand is already locked in. As of March, the company had 66 gigawatts of contracted module sales stretching through 2030, worth nearly $20 billion in revenue.
That backlog provides rare visibility in an industry often plagued by pricing swings and inconsistent order flow.
With global energy demand climbing, especially from AI and data center operators, the odds are high that these bookings will translate into durable growth.

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Financial Strength
First Solar’s profitability separates it from many peers.
While competitors like SolarEdge and Canadian Solar have struggled with high costs and weaker balance sheets, First Solar continues to produce strong free cash flow even as it ramps up expansion.
Revenue Q2 2025: $1.1 billion
Gross margin: 42.8%
Operating margin: 31.8%
Net cash: $580 million
Debt-to-equity: 0.07
Such numbers support analyst optimism that earnings growth could average more than 30% annually over the next three to five years.
With consensus estimates calling for $15 in adjusted EPS this year and potential to reach $32 by 2029, the company may be significantly undervalued at its current multiple of about 17 times earnings.

Risks to Watch
Policy Shifts: U.S. subsidies like Section 45X credits remain vital for margins. Any cuts could hit profits.
Tariffs: Higher duties on overseas production in Vietnam and Malaysia may raise costs and shrink backlog.
Product Issues: Series 7 warranty expenses between $56 million and $100 million could weigh on results.
Competition: Chinese players, though constrained in the U.S., remain formidable globally.
Valuation Premium: At a forward P/S of over 3x, First Solar trades richer than peers, leaving less margin for error.

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Action Plan
Investors have several ways to think about positioning:
Growth Buy: Long-term investors could accumulate shares on weakness, aiming for potential upside toward analyst targets in the $250–280 range. With earnings growth visibility and capacity expansion, the long-term case remains strong.
Momentum Play: Traders may treat pullbacks below $190 as opportunities, looking to ride the next wave of analyst-driven optimism.
Hedge Against Energy Volatility: Exposure to solar can act as a partial hedge against fossil fuel-driven energy inflation. For portfolios tied heavily to oil or gas, this diversification may prove useful.

Outlook
First Solar’s story is no longer just about government subsidies or the latest climate policy cycle.
The rise of AI and data-intensive computing is creating structural energy demand that must be met somehow.
With a strong domestic manufacturing base, secured backlog, and growing scale, First Solar is positioned to benefit from that transition.
Short-term swings remain likely, especially as Washington debates energy incentives, but the long-term trajectory is clear.
Investors willing to navigate the volatility may find this solar leader offering both growth and resilience in a market still searching for reliable clean energy winners.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.
Best Regards,
— Adam Garcia
Elite Trade Club
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