U.S. solar stocks extended their post-election rally early Thursday, but some reversed course by the afternoon as investors reassessed the prospects for restoring tax credits, the outlook for data center construction and companies’ latest guidance. The sharp run-up in recent sessions also prompted profit-taking, leaving shares mixed.
Tax credit restoration still faces hurdles
Jonathan Kees, an analyst at Daiwa Capital Markets, said profit-taking was unsurprising after solar stocks rose in the post-election rally over several sessions. He also noted that some companies’ recent near-term outlooks had been disappointing.
Gordon Johnson, CEO of GLJ Research, described the move as investors “selling the news.” Markets had expected progress by Democrats in Congress to improve the chances of restoring tax credits for solar and electric vehicles. But although Democrats secured majorities in both chambers, they did not reach the two-thirds threshold. Any legislation would still need the president’s signature or enough votes to override a veto. Johnson said the election results had not changed any company’s 2027 earnings outlook.
The president has sent mixed signals about working with Democrats, leaving the direction of tax-credit policy uncertain. For solar companies, incentives can affect demand, but any restoration depends on the legislative process moving forward.
Data center delays add uncertainty to demand
Chris Dendrinos, an analyst at RBC Capital Markets, said solar stocks also fell alongside some AI-related shares. Data center developers have largely turned to natural gas generation, but rising electricity needs could also create room for solar power.
Dendrinos cautioned that the election results could lead to some data center projects being canceled or delayed. A slowdown in construction could push back related power demand, weighing on expectations for the solar sector. Investors are therefore watching not only tax policy but also whether spending on AI infrastructure proceeds on schedule.
Company guidance drives divergent share moves
Sunrun gave up some of its early gains on Thursday but held on to a rise of about 10%. Its third-quarter results, released on November 3, topped analyst expectations. The company, however, lowered its full-year total customer value outlook for new subscribers to $4.6 billion, the bottom of its previous $4.6 billion to $4.9 billion range. FactSet’s analyst consensus rating as of November 5 was “Overweight.”
First Solar initially rose before turning lower, with the shares hovering near unchanged. Last week, the company cut its full-year net sales guidance from $4.9 billion-$5.2 billion to $4.6 billion-$4.9 billion. Analysts’ overall rating on the stock remained tilted toward “Overweight.”
SolarEdge fell 13% on Thursday. Its third-quarter results, released November 4, were broadly better than expected, but its fourth-quarter guidance came in below analyst estimates. Kees said the weaker outlook, near-term demand prospects and the possibility that revenue will decline sequentially again in the first quarter of 2027 suggest that a recovery still depends on market conditions improving. FactSet showed an average rating of “Hold.”
Enphase Energy dropped 10%. Johnson said the company’s fourth-quarter revenue guidance was about 20% below the market consensus, while U.S. sell-through fell 35% year over year. He said Congress cannot directly resolve weak demand. FactSet’s average rating for the stock was “Hold.”
Nextpower, formerly known as Nextracker, fell 11%. Jefferies analysts said the company was using its cash flow to expand its business as end markets slowed, and pointed to its strong balance sheet and lack of debt. They also noted its recent moves into energy storage and inverters. FactSet data showed Nextpower was the only solar company mentioned in the article with an average “Buy” rating.
Solar generation continues to expand
Research group Ember reported that solar power generation has grown rapidly over the past year, surpassing global wind and nuclear generation. The gap between solar and hydropower is narrowing, though solar output remains well below that of fossil fuels. Cheaper solar panels and batteries, fuel shortages and government incentives have all supported the expansion.
For investors in the near term, the key questions remain whether tax credits can be restored, how quickly data center projects move ahead and whether company guidance points to an improvement in demand.