Will First Solar Be A Beneficiary Of The AI Boom?

Core Viewpoint - First Solar is experiencing significant growth driven by regulatory support, easing supply chain issues, and increasing demand for renewable energy, particularly in the context of the artificial intelligence sector [1][2][3]. Group 1: Company Performance - First Solar's stock has risen over 50% since early 2024, with revenues increasing by 45% year-over-year to $794 million and earnings surpassing estimates at $2.20 per share [1]. - The company has a strong backlog of bookings, growing to over 78 GW as of March 2024, up from 61.4 GW at the end of 2022, providing solid revenue and gross margin visibility [4]. Group 2: Market Trends - The demand for solar power is expected to rise as big tech companies expand data centers powered by AI, which requires significantly more electricity [2]. - First Solar's cadmium telluride panels are preferred for large utility-scale installations, positioning the company favorably in the market [2]. Group 3: Regulatory Environment - The Biden Administration's increase of tariffs on solar cells imported from China from 25% to 50% enhances the competitiveness of U.S.-based manufacturers like First Solar [3]. - First Solar is set to benefit from the Section 45X tax credit under the U.S. Inflation Reduction Act, with expectations to realize $1.0 billion to $1.05 billion in tax credits this year [3]. Group 4: Production Capacity - First Solar's manufacturing capacity is expanding, with total nameplate capacity expected to grow from 16.6 GW in 2023 to over 25 GW by 2026 [4]. - The company is increasing its manufacturing presence in the U.S., particularly in states like Alabama, Louisiana, and Ohio [4]. Group 5: Stock Performance - First Solar's stock has seen a 160% increase from $100 in early January 2021 to around $260, outperforming the S&P 500's 45% increase over the same period [5]. - The stock's performance has been inconsistent, with returns of -12% in 2021, 72% in 2022, and 15% in 2023, indicating challenges in consistently outperforming the S&P 500 [5]. Group 6: Future Outlook - The macroeconomic environment is improving, with cooling inflation and potential interest rate reductions by the Federal Reserve, which could benefit renewable energy stocks [7]. - First Solar is positioned as a key beneficiary of U.S. efforts to promote domestic renewable production due to its vertically integrated manufacturing [7].