Policy Shift Cannot Stop First Solar's (FSLR) Near-Term Momenum

First Solar (FSLR) is one of the most compelling investment opportunities I see right now—and I'm a shareholder for two key reasons. First, the medium-term demand outlook is already well-defined, providing strong visibility.
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Second, with recent policy shifts from the 'Big Beautiful Bill,' near-term demand could surge as developers rush to secure projects before tax credits begin phasing out in 2028. I view this as a high-alpha, 12-month cyclical play, with recent volatility being mere noise. The stock has taken a severe 18% hit over the past week. My conviction remains strong—I'm staying bullish on First Solar.
Tax Credits Get Phased Out, but First Solar Still Thrives
Previously, utility-scale solar projects qualified for a 30% tax credit through 2032, but that timeline has now been significantly accelerated. Starting in 2026, new projects will receive just 60% of the 30% credit (an effective 18%). By 2027, that drops to 20% of the 30% credit (just 6%), and by 2028, the credit is eliminated entirely.
That said, developers can still lock in higher credits by starting construction early, and the transferability of tax credits remains intact. Importantly, Section 45X credits remain fully available through 2029, providing a meaningful financial cushion. As a result, two key dynamics emerge. First, near-term demand for First Solar panels is likely to spike, followed by a sharp decline. Next, the 45X cushion could leave First Solar in a stronger short-term position than it was before the policy change.
While First Solar stock dropped nearly 20% following the broad solar selloff triggered by the 'Big Beautiful Bill,' that decline was modest compared to residential-focused names like Enphase (ENPH) and Sunrun (RUN), which were hit harder due to the immediate loss of residential solar credits.
Looking ahead, some medium-term turbulence is likely to occur. But in the near term, the investment case for First Solar remains strong, and in my view, the current pullback offers an attractive entry point for potential market-leading returns by 2026.
12-Month $290 Price Target in Sight
Following the recent sell-off, First Solar is now trading below its 200-week moving average, presenting what I believe is a rare and compelling accumulation opportunity. With the near-term outlook intact—and arguably strengthened by the coming tax credit phase-out in 2027/2028, this sets up what I view as a high-conviction 12-month trade.
Yes, solar stocks are notoriously volatile, but with the major impacts of the 'Big Beautiful Bill' now priced in, the focus shifts to execution and sentiment stabilization. It's hard to see what additional policy shocks could further destabilize the sector in the near term.
In my bull-case scenario, I project $25 in normalized EPS for Fiscal 2026 and a non-GAAP P/E multiple of 15, implying a potential share price of $375. That said, I'm setting a more conservative take-profit target at $290, reflecting cautious optimism while aiming for a strong return. From current levels around $145, that would represent a 100% gain—a trade setup that's hard to beat in today's market.
First Solar May Consolidate the Market in This Climate
Stricter Foreign Entities of Concern (FEOC) rules under the 'Big Beautiful Bill' are set to strongly benefit U.S.-based manufacturers like First Solar. Its vertically integrated, China-independent Cadmium Telluride (CdTe) technology gives it a unique edge in meeting domestic content requirements and navigating tighter import restrictions.
These policy shifts are likely to lead to industry consolidation, with First Solar emerging stronger as a result. While the path forward may involve volatility, the company's scale, infrastructure, and reputation position it to outlast and outperform smaller, margin-strained competitors. As weaker players exit or downsize, First Solar could gain pricing power and further expand its market share over the medium term.
Is First Solar a Good Stock to Buy Now?
Wall Street maintains a Strong Buy consensus on First Solar, with 23 Buy ratings, 3 Holds, and zero Sells. The average price target sits at $210, implying a 46% upside over the next 12 months. The most bullish analyst target is $275, which closely aligns with my own independent target of $290. Given the evolving policy landscape, I plan to reassess my position around the $250 level, to trim depending on how market sentiment unfolds in the coming months.
The Market Is Nowhere Near Done with First Solar
While cyclicality and volatility come with the territory for First Solar—and solar stocks in general—the near-term profit potential remains compelling. Looking further out, it's clear that solar demand isn't going anywhere. Tax incentives may decline, but fossil fuel supplies are finite, and the shift toward renewable energy is inevitable.
First Solar is positioning itself now to become America's most dependable solar energy asset, and that long-term vision keeps me bullish. While I'll continue to trade around the cycles like a pro, my core conviction in First Solar's future remains strong.

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