First Solar has maintained strong momentum in its solar module business, with results showing continued year-over-year top-line growth and elevated profitability. The stock has risen sharply over the past five years, but it remains down about 2% year to date, underscoring that investors are still weighing the durability of demand against the company’s valuation and competitive landscape.
Recent company disclosures tied the quarterly performance to higher module sales volume to third parties, alongside a large contracted backlog that extends visibility into the second half of the decade. With data centers increasingly viewed as a key driver of electricity demand, First Solar’s ability to supply utility-scale solar—especially if new AI infrastructure ramps—appears to be central to how investors are framing the opportunity.
Key takeaways
- Price move: First Solar shares are down roughly 2% year to date, despite a multi-year run that has more than tripled the stock over five years.
- Catalyst: The company reported first-quarter net sales of $1.04 billion, up 24% year over year, driven by increased module volumes sold to third parties.
- Revenue visibility: First Solar said it has a 47.9-gigawatt contracted backlog, supporting multi-year growth expectations.
- Profitability: Net margins reached 33% in the quarter, indicating margins are expanding alongside sales growth.
- Implication: Investors are likely to focus on whether AI-related power demand can sustain utility-scale solar ordering and whether current valuation properly reflects that outlook.
What drove the move
First Solar’s latest quarterly update offered an operational picture geared toward sustained growth. The company reported first-quarter net sales of $1.04 billion, up 24% year over year, and pointed to an increase in the volume of modules sold to third parties as a key driver. Management linked this volume growth to demand dynamics tied to broader AI-related power needs.
The company also highlighted its backlog, citing 47.9 gigawatts of contracted capacity. Backlog provides a forward-looking line of sight for revenue, and First Solar tied this contracted portfolio to future sales expectations, including projected module sales of 17.6 gigawatts at the 2026 midpoint and earnings of $5.05 billion.
Within the quarter, First Solar noted record sales contributions from India, with approximately 1 gigawatt worth of energy sold to the country. The company also pointed to “substantially committed” U.S. production through 2028, suggesting continued execution on pipeline commitments in major markets.
Market reaction and what investors are watching
Despite the positive fundamentals, the stock’s year-to-date softness suggests not all market participants are fully priced into the durability of growth and margins. First Solar’s share performance—more than tripling over five years while experiencing notable drawdowns of 20% and 40% at various points—signals how sensitive the name has been to shifting expectations for solar demand, project economics, and capital market conditions.
Investors are likely to be focused on whether utility-scale solar can translate AI-fueled electricity consumption into repeatable commercial and industrial offtake activity. The company’s narrative emphasizes that using solar to power AI data centers could reduce pressure on the electric grid. First Solar’s positioning also assumes an expansion of power generation needs, including scenarios where new types of AI deployments increase demand for long-duration, grid-supporting energy sources.
Valuation, margins, and peer context
Alongside growth, First Solar’s valuation metrics are central to the bull case presented in the report. The company is described as trading at a 16.5 price-to-earnings ratio and a 0.67 price/earnings-to-growth ratio. The valuation is positioned as low relative to its recent performance, including an annualized revenue growth rate of 25.8% over the past three years.
Profitability has also improved, with net margins reaching 33% in the first quarter. That combination—strong top-line growth paired with rising margins—helps explain why the valuation is being framed as attractive, particularly in a sector where profitability outcomes have often been less consistent.
The report further compares First Solar’s valuation with select peers, noting that Enphase Energy trades at a 51.1 P/E ratio even as it has posted year-over-year revenue declines in recent quarters. It also references SolarEdge as remaining unprofitable, alongside a projected forward P/E ratio of 208. The implication for investors is that First Solar’s growth profile and margin profile may be occurring at a valuation that looks less demanding than several alternatives in the broader solar market.
Bigger picture
The investment thesis relies on the idea that demand for utility-scale solar could strengthen as electricity needs rise from the AI build-out. For a company with long-dated backlog and ongoing production commitments, the key question for the market is whether those megawatt-hours translate into sustained module demand and stable project execution across geographies.
Looking ahead, investors will likely monitor subsequent quarterly results for continued volume growth from third-party module sales, progress on contracted backlog conversion, and any update to guidance around gigawatt sales expectations. Broader market drivers—particularly the trajectory of interest rates and power-related permitting and project finance conditions—may also influence investor sentiment toward solar developers and manufacturers. The next company update and guidance details should help determine whether the current margin strength and revenue visibility can extend further than the market’s expectations.
