Are there still opportunities in solar energy concept stocks in 2026? An analysis of leading companies' investment prospects

The wave of global energy transition continues to advance, and the investment appeal of solar energy concept stocks is changing accordingly. From policy support to market challenges, the solar industry in 2026 is at a critical turning point. Is it still worth entering this period? We will analyze the real investment logic of solar concept stocks by starting with leading companies in the U.S. and Taiwan markets.

According to the U.S. Energy Information Administration (EIA), the total installed capacity of solar PV in the U.S. is projected to reach 182 GW by 2026, with Texas leading all states, adding over 11 GW annually. The federal Inflation Reduction Act (IRA) provides significant tax credits for businesses and households, attracting substantial capital inflows into the solar sector.

However, investors should also be aware of the complex industry environment: intensified competition from China, high interest rates, supply chain adjustments, and other factors are reshaping the profitability landscape of the solar panel industry. Against this backdrop, choosing solar concept stocks with core competitive advantages is especially crucial.

U.S. Solar Market Heating Up, Leading Stocks Present Hidden Opportunities

The growth drivers of the U.S. solar market come from multiple levels. Utility-scale solar installations continue to grow strongly, with large photovoltaic power plant projects constantly releasing new orders. Meanwhile, government support for domestic manufacturing and tariffs on imported components are changing the competitive landscape.

First Solar: Efficiency and Long-term Contracts as Moats

Founded in 1999, First Solar focuses on thin-film photovoltaic technology, which offers superior performance in low-light and high-temperature environments compared to traditional silicon-based modules. The company is listed on NASDAQ under the ticker FSLR.

First Solar’s core competitiveness is supported by two aspects. First is technological advantage: its proprietary thin-film modules are larger in size, further reducing cost per watt, making it the preferred choice for utility-scale projects. Second is long-term contracts: the company has signed long-term supply agreements with several U.S. utilities, establishing a stable revenue base and directly benefiting from IRA tax incentives.

Industry analysis suggests that under a baseline scenario, if the company achieves about 5% annual revenue growth with stable profit margins, EPS could remain around $8. In a more optimistic scenario—if the Fed restarts rate cuts and large solar projects proceed, coupled with rising residential PV demand—EPS could rise to $10 by 2026, with a stock price potentially reaching $250.

Analysts’ average target price is $210.12, with a high estimate of $275 and a low of $157.

Nextracker: Growth Powered by Tracking Systems

Nextracker supplies intelligent tracking systems for utility-scale solar farms, optimizing PV panel orientation in real-time to maximize sunlight capture and significantly improve power generation efficiency. The company experienced a strong mid-2025 performance, with quarterly earnings surpassing analyst expectations, leading to a stock price surge.

The company attributes its excellent performance to robust global demand for solar solutions. The founder and CEO stated during the earnings call that current results lay a foundation for continued growth throughout the year and support key strategic investments. With a strong balance sheet and free cash flow advantages, the company’s valuation is reasonably higher than peers.

Analysts’ average target price is about $64, with a high of $71 and a low of $52, representing approximately 12% upside.

Enphase Energy: Supply Chain Shifts and Cost Challenges

Founded in 2006 and headquartered in California, Enphase specializes in microinverters to improve solar conversion efficiency. Listed on NASDAQ as ENPH, the company has recently expanded into energy storage and management software, aiming to create comprehensive residential energy solutions.

The key challenge for Enphase is supply chain adjustment. Currently, 95% of its lithium iron phosphate (LFP) battery cells are sourced from China, due to long-term dependency. In the context of changing international trade policies, the company expects to bear most of the tariff impacts. It projects that in Q2 2025, gross margin will be pressured by 200 basis points, with the impact expanding to 600–800 basis points in Q3.

However, the timing of this impact is critical. Enphase is actively diversifying its battery cell supply sources, aiming for most of its battery supply to shift away from China by Q2 2026. Although this strategic adjustment may cause short-term pressure, it is expected to mitigate policy risks in the long run.

Analysts’ average target price is about $50.82, with a high of $84 and a low of $31.11.

Fundamental Support for Taiwanese Solar Concept Stocks

Taiwan-listed companies have diversified across various segments of the solar industry chain. Compared to the high volatility of U.S. stocks, Taiwanese solar concept stocks show more stable fundamentals.

Delta Electronics: A Versatile Power Solutions Provider

In 2024, Delta Electronics reported consolidated revenue of NT$421.1 billion, up 5% year-over-year. The company maintains a high gross profit margin of 32.4%, with net profit of NT$35.2 billion and a net margin of 8.4%. EPS reached NT$13.56. Return on equity (ROE) remains strong at 16.4%, with solid financial indicators overall.

Morgan Stanley recently raised its target price for Delta from NT$440 to NT$485, maintaining an overweight rating. The report highlights the company’s breakthroughs in high-voltage DC (HVDC) power solutions for AI data centers and industrial sectors. As global demand for high-end power solutions grows, Delta is expected to benefit continuously, with growth momentum extending into 2027.

Notably, Delta not only participates in energy conversion related to solar but also plays a key role in the entire green energy ecosystem, offering broader growth potential.

Chung Hsin Electric: Orders and Profitability Dynamics

Chung Hsin Electric’s 2024 performance is highly anticipated. The company posted a net profit of NT$3.623 billion, a 128% increase from the previous year, setting a record. EPS reached NT$7.33, a new high.

In 2025, Chung Hsin Electric continues to benefit from Taipower’s robust grid expansion. In Q1, revenue hit NT$6.448 billion, a record high for the quarter. However, due to a higher proportion of low-margin engineering projects, EPS for Q1 was NT$1.78, slightly down from NT$1.93 a year earlier.

This reflects the current growth logic: supported by increasing order volume, the company faces challenges in optimizing its business structure. Despite short-term margin pressures, strong order forecasts provide a growth foundation. Latest analyst surveys have raised the median target price to NT$195.5, about 7% higher than previous estimates.

China Rental-KY: Participant in Energy Transition

China Rental-KY plays a noteworthy role among solar concept stocks. Its valuation metrics are more attractive compared to peers, with PE and PB ratios below average. Importantly, its dividend yield exceeds 5%, outperforming the market. Recent insider buying by major shareholders further confirms management’s confidence in the company’s prospects.

Lessons from the History of Solar Industry and Current Environment

Understanding the risks of solar concept stocks requires a review of the industry’s development history. Solar technology’s application began in the 19th century: in 1839, French scientist Alexandre Edmond Becquerel discovered the photovoltaic effect; in 1954, Bell Labs developed the first practical silicon-based PV cell, marking the start of commercial technology.

The 1960s saw the U.S. space program drive solar technology development. The 1970s energy crises further stimulated global demand for alternative energy. In the 21st century, China’s massive capital investment and policy support drastically reduced solar costs. According to IEA data, by 2021, solar had become the cheapest electricity source in many regions worldwide.

However, the industry has experienced multiple fluctuations. The 2008 financial crisis caused a bubble burst in solar concept stocks. During the 2010s, policy shifts and overcapacity in China led to volatility. The COVID-19 outbreak in early 2020 impacted the global economy, but subsequent government stimulus and green energy investments boosted solar demand again.

In 2024, the U.S. solar industry faces multiple challenges: strong utility-scale growth, but a 32% decline in the residential market; high interest rates and Chinese competition exert pressure; policy uncertainties like IRA cast a shadow over the industry. These factors have led to differentiated performance among solar concept stocks, with the Invesco Solar ETF (TAN) falling over 37% for the year, and some companies even facing bankruptcy.

Investment Logic and Risks of Solar Concept Stocks

Investing in solar concept stocks today requires a clear understanding of core logic. First, the sustainability of policy support: IRA policies at the federal level are a key growth driver for many companies, but policy risks remain. Second, supply chain stability: intensified Chinese competition and diversification are reshaping the industry landscape. Third, financing environment: interest rates directly impact the economics of large PV projects and consumer willingness to buy.

Among U.S. solar stocks, First Solar remains relatively stable due to long-term orders and technological advantages but still needs to watch policy risks; Nextracker’s innovative tracking systems provide differentiated competitiveness, with recent strong performance; Enphase Energy faces short-term supply chain costs but has promising long-term diversification strategies.

Taiwanese solar stocks tend to show more stable fundamentals and reasonable valuations. Delta Electronics benefits from the energy transition trend, with diversified business providing broader growth space; Chung Hsin Electric’s order backlog supports growth; China Rental-KY participates from a financing perspective.

By 2026, solar stocks face both long-term opportunities from the global energy transition and multiple challenges such as policy uncertainty, intensified competition, and financing conditions. Investors should carefully assess risks and select companies with core competitive advantages and solid fundamentals.