2025 Solar Energy Industry Investment Guide: Seize Profit Opportunities in the Energy Transition

Entering 2025, Solar Energy Concept Stocks are ushering in a new wave of investment enthusiasm. Against the backdrop of accelerated global energy structure adjustments and heightened climate change concerns, the solar industry is becoming a focal point in capital markets. How should investors seize the opportunities brought by this green energy wave? This article will analyze the market dynamics of the solar panel sector in depth and identify leading companies with growth potential in the US and Taiwan stock markets.

Why the Solar Industry Attracts Investors’ Attention

Compared to other renewable energies, solar energy possesses several unique advantages. First, solar resources are naturally abundant and widely distributed, allowing effective utilization almost everywhere. Second, after system installation, operation and maintenance costs are low, and maintenance is relatively simple. More importantly, recent breakthroughs in solar technology have led to continuous declines in production costs, expanding application scenarios from small household PV systems to large-scale power plants, with promising market prospects.

However, it must be recognized that the solar panel sector also faces challenges—policy environment volatility, intensifying market competition, and rapid technological iteration—all of which can impact corporate operations.

Investment Targets in the US Solar Sector

First Solar: Expert in Thin-Film Technology

First Solar was founded in 1999, based in Arizona with abundant sunlight, focusing on the production and sales of solar photovoltaic modules. Its thin-film PV technology is well-known in the industry. The company went public on NASDAQ in 2006 (ticker: FSLR).

The company’s core competitiveness lies in its proprietary advanced thin-film module technology. In non-ideal environments such as low light and high temperature, this technology significantly outperforms traditional silicon-based modules. Its larger module design further reduces cost per watt, making it an ideal choice for utility-scale solar projects.

Unlike many unprofitable solar companies, First Solar stands out as a leader in US solar panel manufacturing. Benefiting from the policy support of the Inflation Reduction Act (IRA), it has established long-term supply relationships with multiple US utilities and enjoys government policies favoring domestic manufacturing and import component tariffs.

Analysts estimate that under a baseline scenario, if the company’s revenue remains stable or grows at about 5% annually, and profit margins stay at current levels, EPS could stabilize around $8. In a more optimistic scenario, with federal rate cuts boosting large-scale project investments and residential PV demand rebounding, EPS could reach $10 by 2026. At a 25x P/E ratio, the stock price could break through $250.

On average, 26 Wall Street analysts’ 12-month target price is $210.12, with a high of $275 and a low of $157. Compared to the current stock price of $166.35, there is still a 26.31% upside potential.

Nextracker: Rising Star in Tracking Systems

Nextracker specializes in smart tracking systems for utility-scale solar farms. Its solutions optimize PV panel orientation in real-time to maximize sunlight capture, significantly improving power generation efficiency and project returns.

Recently, the company has become a strong performer in the solar sector. After surpassing expectations in its Q1 earnings report on May 15, its stock surged nearly 12% and has remained high. The company attributes its strong performance to robust global demand for solar solutions. The founder and CEO emphasized during the earnings call that current results lay a foundation for continued growth this year and support key strategic investments.

Eighteen Wall Street analysts’ average 12-month target price is $63.94, with a high of $71 and a low of $52, representing a 12.33% upside from the current price of $56.92.

Enphase Energy: Pioneer of Microinverters

Enphase Energy was established in 2006, headquartered in California, focusing on designing and manufacturing microinverter systems to improve solar panel conversion efficiency. It went public on NASDAQ in 2012 (ticker: ENPH). Recently, the company has expanded into energy storage and management software, offering comprehensive residential energy solutions.

The company is currently impacted by US-China tariff disputes. According to disclosures, 95% of its lithium iron phosphate (LiFePO4) batteries are sourced from China. In the short term, it expects to bear most of the tariff burden, with gross margin expected to be compressed by 200 basis points in Q2 2025, and the impact expanding to 600-800 basis points in Q3.

However, this pressure is phased. Enphase is actively diversifying its battery supply sources, aiming that by Q2 2026, most batteries will come from non-China sources.

Twenty-five Wall Street analysts’ average 12-month target price is $50.82, with a high of $84 and a low of $31.11, indicating a potential 23.41% upside from the current price of $41.18.

Leading Companies in Taiwan’s Solar Panel Sector

Delta Electronics: Versatile Power Solutions Provider

Delta Electronics reported steady performance in 2024, with consolidated revenue reaching NT$421.1 billion, up 5% year-over-year. Gross profit margin remained high at 32.4%. Net profit was NT$35.2 billion, with a net profit margin of 8.4%. EPS was NT$13.56, and ROE reached 16.4%. All financial indicators showed robust growth.

Morgan Stanley recently issued a research report raising its target price from NT$440 to NT$485, maintaining an “Overweight” rating. The report highlights Delta’s technological advantages in high-voltage DC power solutions for AI data centers and industrial sectors. As global demand for high-end power supplies increases, Delta is expected to continue benefiting, with growth momentum extending into 2027.

ZTE Electric: Infrastructure Builder

ZTE Electric posted impressive results in 2024, with net profit after tax reaching NT$3.623 billion, a 128% increase from the previous year, setting a new record. EPS also hit a new high at NT$7.33.

In Q1 2025, the company continued to benefit from Taiwan Power Company’s resilient grid expansion, with revenue reaching NT$6.448 billion, a new high for the same period. However, due to a higher proportion of lower-margin engineering projects, EPS declined from NT$1.93 to NT$1.78 compared to the same quarter last year.

According to FactSet’s latest survey, the median target price among six analysts for ZTE Electric has been revised upward from NT$182.5 to NT$195.5, a 7.12% increase, with a high estimate of NT$211 and a low of NT$167.

China Rental-KY: Valuation Highlights

China Rental-KY currently has an attractive valuation, with PE and PB ratios below industry averages. Its dividend yield is 5.04%, outperforming the broader market. Notably, major shareholders have recently increased their holdings, indicating management’s confidence in the company’s prospects.

Additional Stocks

Besides the core stocks above, Array Technologies is expected to outperform market expectations in 2025 due to lower steel prices improving costs. Shoals Technologies Group projects an 8% annual revenue growth in 2025, with management planning to achieve a long-term gross margin of 40-45% through cost control and automation upgrades. Brookfield Renewable is also gaining attention for its high dividend yield and stable growth in distributions.

Market Review of Solar Concept Stocks

Industry Evolution Trajectory

Solar technology originated from the photoelectric effect discovered by French scientist Edmond Becquerel in 1839. Practical use began with Bell Labs’ silicon-based photovoltaic cells in 1954. The 1960s US space program drove technological advances, and the 1970s energy crises spurred demand for alternative energy sources. It wasn’t until the 1990s, with technological progress and scale expansion, that PV costs started to decline. Entering the 21st century, the industry exploded, especially with massive capital investment from China, causing global solar costs to plummet. According to IEA data, by 2021, solar had become the cheapest power source in many regions worldwide.

Recent Market Performance Analysis

Taking the representative Invesco Solar ETF (TAN) as an example, its price trend reflects the sector’s market changes. Although the 2008 financial crisis caused a downturn, the 2010s saw rapid growth driven by increased global climate commitments. Post-2020 pandemic recovery, many countries launched green energy investment plans, boosting solar sector enthusiasm.

In 2024, the US solar industry faces multiple challenges. While utility-scale solar continues to grow, the residential solar market declined by 32%. High interest rates and competition from China have created macro headwinds, leading to widespread losses among companies. Uncertainty over policy adjustments, such as the IRA, underscores the industry’s dependence on policy environment. TAN fell 37.62% in 2024; individual stock performances varied—SunPower plunged about 70% into bankruptcy, SolarEdge dropped from $80 to below $20, but First Solar showed resilience with a slight gain for the year.

Investment Outlook

The US Energy Information Administration (EIA) estimates that the total installed capacity of solar PV in the US will reach 182 GW by 2026, with Texas leading all states with an annual addition of 11.6 GW in 2025. Federal policy support provides tax incentives for corporate and household investments in solar, boosting market confidence. In this context, US stocks like First Solar, Nextracker, Enphase Energy, and Taiwan stocks like Delta Electronics, ZTE Electric, China Rental-KY all demonstrate growth potential. Investors should consider company fundamentals, policy environment, technological progress, and valuation levels comprehensively to make rational investment decisions.