1. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Investors in Q1 2024: 51
Average Analyst Share Price Upside: 30%
Average Analyst Share Price Target: $290.9
First Solar, Inc. (NASDAQ:FSLR) is an industrial grade solar cell provider that serves utilities, power producers, businesses, and other users. On the face of it, this would leave the shares vulnerable to the interest rate and inflationary tailwinds that we’ve discussed so far. However, First Solar, Inc. (NASDAQ:FSLR)’s shares are up by 29% year to date, bucking the trend of slow returns in the clean energy sector. This performance has come on the back of several developments, which are also key to the firm’s hypothesis. Geopolitics and technology are the central tenets of the story, as First Solar, Inc. (NASDAQ:FSLR) can benefit from the Chinese solar industry’s call to end pricing wars that lower their profits and the US increased tariffs on Chinese solar cells to 50% from an earlier 25%. This creates more market room for First Solar, Inc. (NASDAQ:FSLR) as its products can compete on a price basis. Additionally, it is one of the few stocks that Wall Street is optimistic about when it comes to AI. First Solar, Inc. (NASDAQ:FSLR)s’s industrial focus means that it can benefit significantly if AI data center operators decide to rely on clean solar energy to power their operations, and the shares reflect the optimism.
Here’s what First Solar, Inc. (NASDAQ:FSLR)’s management had to say on the AI trends during its Q1 2024 earnings call:
“So I don’t know if I have a good number for you. I would say, if you look at the companies that we talked about on the call, the ones that we’re going to be adding today in demand significantly, Apple Google, Microsoft, Meta, they value certainty even more than the utility. So if you think about utility potentially contract multiple projects, and they can deal with a level of failure or delay in a way that you guys can’t if they have commitment to renewable targets at certain times. So they value certainty, and they certainly value the reliability of where the product is coming from and the concerns around slave labor. So we tend to be the first port of call for many of these companies or the developers who are doing the work for them.
And so in many cases, developers will come to us saying that they have had discussions with these people and that they’ve a preference to buy or work with the solar products, especially for U.S.-based demand. So, I don’t think I have a percentage I can give you, but I would say that generally, we’re going to be the favored supplier to the project that are going to be supplying power to these data centers or these kind of asset owners.”
FSLR is a top analyst manufacturing stock. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None.
