The solar industry has experienced significant growth over the past four years, largely due to supportive policies from the Biden administration. The industry’s resilience is notable, as analysts and industry officials believe that solar power’s rise can withstand potential policy changes under the Trump administration, which has pledged to dismantle clean power subsidies and related policies.
However, there are several hurdles to overcome. Trump has pledged to impose a 10% tariff on goods from China, a critical source of solar components for U.S. developers. This tariff, in addition to those already imposed by the Biden administration, is likely to increase the cost of new solar projects, potentially slowing installations until domestic supply chains can ramp up. The domestic solar supply chain is also rapidly expanding and many new solar component manufacturing plants are located in states that voted for Trump in 2024. These manufacturers argue that the administration needs to maintain its current course to foster further growth. The cost of solar projects will also depend on whether the Trump administration follows through on its promises to roll back critical subsidies and tax breaks established by Biden’s 2022 climate law.
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According to a report by S&P Global published on January 13, the clean energy sector is experiencing significant transformations, with solar photovoltaic (PV) technology taking center stage. The report, titled “Top Cleantech Trends for 2025,” forecasts that cleantech energy supply investments, including solar PV, will reach $670 billion in 2025, marking the first time these investments will outpace projected upstream oil and gas spending. Solar PV is expected to represent a substantial portion of these investments, accounting for half of all cleantech investments and two-thirds of installed megawatts. This shift underscores the growing dominance of renewable technologies, particularly solar, in the global energy landscape.
The report highlights that despite the significant financial commitment to solar PV, the overall investment levels remain insufficient to meet urgent climate goals of tripling renewable capacity by 2030. The report also addresses the challenges and opportunities within the evolving solar supply chain. An oversupply of solar equipment from China is affecting the solar, wind, and battery sectors, leading to price declines that may stabilize in 2025. However, the competition from Chinese manufacturers is expected to keep prices low, fundamentally altering industry pricing dynamics.
Despite uncertainties, the trajectory of solar power remains overwhelmingly positive, driven by technological advancements, increasing investments, and the urgent need to meet global climate goals. With that in context, let’s take a look at the 8 most promising solar stocks according to hedge funds.
A solar panel array, its blue sky backdrop beaming with power.
Our Methodology
To compile our list of the 8 most promising solar stocks according to hedge funds, we used Finviz and Yahoo stock screeners, and clean energy ETFs to compile an initial list of 25 solar energy stocks. We then used Insider Monkey’s Hedge Fund database to rank 8 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Most Promising Solar Stocks According to Hedge Funds
8. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Investors: 20
SolarEdge Technologies, Inc. (NASDAQ:SEDG) is a global leader in smart energy technologies, best known for its inverters, power optimizers, and energy storage solutions for solar systems. The company’s innovative technology, including its DC-optimized inverter systems, plays a crucial role in the global renewable energy market.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) is implementing aggressive pricing strategies and promotions, particularly in Europe and international markets. The company has rolled out price reductions and promotions to better compete with low-cost competitors and reduce the pricing gap. These actions are expected to stimulate demand and help clear inventory from distribution channels. Despite the short-term financial impact, SolarEdge Technologies, Inc. (NASDAQ:SEDG) believes that these measures will enable the company to return to its historic gross margin levels, once existing inventory is consumed. The company is also focusing on the development and rollout of next-generation products, which will feature improved cost structures and enhanced technological capabilities. These new products are expected to be a significant driver of market share recovery and profitability in the second half of 2025.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) is strategically evaluating its business units, product portfolio, and geographical presence to refocus on areas with long-term profitability and competitive advantages. The company has divested non-core assets, such as its automation machines business, and standardized its North American residential portfolio to a single SKU to improve manufacturing efficiencies and supply chain management. SolarEdge Technologies, Inc. (NASDAQ:SEDG) is also extending this SKU simplification to its European and international businesses as it rolls out next-generation products.
7. Sunnova Energy International Inc. (NYSE:NOVA)
Number of Hedge Fund Investors: 22
Sunnova Energy International Inc. (NYSE:NOVA) is a residential solar and energy storage service provider. The company primarily generates revenue through its solar-as-a-service model and offers affordable financing options for homeowners to install solar energy systems. Sunnova Energy International Inc.’s (NYSE:NOVA) services include solar installation, maintenance, monitoring, and energy storage solutions.
Sunnova Energy International Inc. (NYSE:NOVA) is prioritizing the optimization of cash generation and capital efficiency to sustain its growth and enhance its market presence. The company has made notable progress by refining its capital markets strategies and maximizing the utilization of investment tax credits (ITC). To increase its weighted average ITC rate, Sunnova Energy International Inc. (NYSE:NOVA) has introduced a requirement for all new lease and PPA systems to comply with domestic content standards. Additionally, the company is collaborating with its dealer network to convert existing uninstalled systems into domestic content systems and further leverage ITC benefits.
Sunnova Energy International Inc. (NYSE:NOVA) is harnessing the strength of its extensive dealer network to attract and serve new customers. By providing its dealers with a state-of-the-art platform featuring advanced software and comprehensive customer support, the company ensures they have the resources and tools necessary for success.
