First Solar (FSLR) is experiencing renewed investor optimism following its Q2 2025 earnings report published at the end of last month, featuring an upward revision to its growth outlook supported by favorable policy developments.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
With specific competitors facing operational and market challenges, First Solar is well-positioned to strengthen its leadership in the U.S. renewable energy sector. However, given the cyclical nature of the solar industry, FSLR may not be ideally suited for a long-term buy-and-hold strategy. Even so, the medium-term prospects remain highly attractive, and my outlook is confidently Bullish.
Strong Q2 Results Stabilize the Bull Case
In Q2, First Solar achieved earnings per share (EPS) of $3.18, which significantly beat the consensus estimate of $2.66. This is a modest decline from the $3.25 reported in Q2 2024. Revenue came in at $1.10 billion for the quarter, which means it meaningfully surpasses the consensus estimate of $1.05 billion. The revenue figure represents a moderate increase from the $1.01 billion reported in the same quarter last year.
The cornerstone of the bull case is management’s decision to raise full-year guidance to $4.9–$5.7 billion, up from the prior range of $4.5–$5.5 billion. Full-year EPS guidance was also tightened to $13.50–$16.50, compared to the earlier $12.50–$17.50 range.
This upward revision, along with strong quarterly results, was driven primarily by higher module sales volumes and improved average selling prices. Management emphasized that the Inflation Reduction Act’s Section 45X advanced manufacturing tax credits continue to provide a direct profitability boost for U.S.-produced modules—although phase-outs are now set to accelerate.
Unlike many competitors, First Solar has minimal exposure to China and operates a supply chain that is largely U.S.-based. This structure enables the company to comply easily with the “Foreign Entity of Concern” (FEOC) rules under the OBBBA, which are far more challenging for peers with less transparent supply chains. Firms that fail to meet FEOC requirements will soon have limited or no access to the 45X tax credits, giving First Solar a significant competitive advantage.
First Solar’s Valuation Remains Attractive
Based on my analysis, First Solar stock is currently fairly valued. That means the investment case is still active due to normalized EPS growth of 55% expected for Fiscal 2026, and 20% annually for Fiscal 2027 and 2028. However, it’s worth keeping in mind that as the solar industry has cyclical tendencies, it’s essential to monitor how long the current demand for solar power capacity expansion lasts. For the time being, FSLR’s latest revenue figures showed the best revenue print since 2020, according to TipRanks data.
The good news is that with so much AI demand and the advent of robotics at scale on the horizon, energy is going to be in short supply. With reshoring trends and the cost efficiencies of solar power, I think First Solar has a powerful long-term return horizon.
Sleeping on FSLR is ill-advised because history tells us demand for solar power products is highly dependent on interest rates and macroeconomic health. A real recession in the next four to five years would likely cause FSLR to plummet at the first sign of macroeconomic contraction approaching.
That said, this is no longer a value opportunity; it’s a growth-at-a-reasonable-price stock. So, we’re probably looking at 20% annual returns from here, given that’s what consensus EPS estimates also suggest.
Alternatively, if AI demand causes a long-term surge in solar power demand, annual returns could surge to 25-30% over the next three years. However, that optionality is heavily dependent on solar power being a preferred form of power generation over the likes of coal, natural gas, and nuclear energy, all of which are gaining attention, albeit at different rates depending on geography.
Is FSLR Stock a Good Buy?
On Wall Street, First Solar has a consensus Strong Buy rating based on 17 Buys, zero Holds, and one Sell. FSLR’s average stock price target is $223, which indicates ~20% upside over the next 12 months.
I view Wall Street’s estimates as conservative yet generally reasonable. Current sentiment toward First Solar is neutral-to-positive, with potential upside from rising macro energy demand tempered by near-term limitations in policy-related benefits—though these constraints are impacting competitors more than FSLR.
According to TipRanks’ stock comparison tool, FSLR is the leading contender in the solar energy space:
FSLR is Well-Positioned in Crowded Market
First Solar has been one of my top performers over the past six months, and I believe the upside story is far from over. The position currently represents 4.4% of my portfolio, and factors such as the OBBBA’s FEOC rules—likely to hinder competitors—reinforce my confidence in its medium-term return potential. Additionally, the prospect of rising energy demand driven by the expansion of AI and robotics provides meaningful upside optionality that could lead to performance exceeding current consensus expectations. I remain long and firmly Bullish.