First Solar's Reign as Top PV Stock Faces Reckoning as U.S. Policy Winds Shift

TMTPOST -- For much of 2024, America's First Solar defied the odds. In an industry long dominated by Chinese manufacturing titans, the Arizona-based company briefly claimed the title of the world's most valuable photovoltaic (PV) firm, outpacing Sungrow and LONGi Green Energy in market capitalization.

But as the political tide shifts in Washington, that dominance—and the policy-driven engine behind it—now faces a dramatic stress test.

Over the past decade, Chinese firms have come to dominate the global solar supply chain, commanding more than 80% of global capacity across all major material segments, from polysilicon to modules.

The top ten rankings for global shipments are virtually a Chinese sweep. Yet in a rare break from this trend, First Solar surged in 2024, buoyed by U.S. subsidies under the Inflation Reduction Act (IRA), favorable trade barriers, and high-priced domestic demand.

That rally sent shares above $300, lifting its valuation past $30 billion at one point. In May 2024, First Solar dethroned Sungrow to become the most valuable solar company by market cap. But a year later, the stock has more than halved, closing at $167.22 on May 20 with a market value of $17.93 billion—just shy of Sungrow's RMB 131.98 billion ($18.29 billion) and still ahead of LONGi's RMB 114.5 billion ($15.88 billion). A single day's price swing or currency fluctuation could shuffle the rankings once again.

First Solar's stellar 2024 results—a record $1.29 billion in net income on $4.2 billion in revenue—stood in stark contrast to the losses piling up at Chinese peers squeezed by overcapacity and plunging prices.

But beneath the surface, analysts warn, much of the profit was underwritten by government support. The company expects up to $1.7 billion in IRA tax credits through 2025—without which, its profit margin would largely vanish.

Revenue gains have also been amplified by a sealed-off domestic market, where First Solar's cadmium telluride thin-film modules fetch a premium. While prices for traditional crystalline silicon modules collapsed globally last year—falling 28–30% in China—U.S. module prices remained 2.5 times higher, aided by tariffs and anti-circumvention measures. First Solar's products sit even higher than the average.

Despite shipping just 14.1GW of modules—far behind China's JinkoSolar at 92.87GW—First Solar generated stronger profits, thanks to elevated ASPs and a protected U.S. market. Chinese firms, including Jinko and Canadian Solar, have openly acknowledged the U.S. as a 「high-price, high-profit」 zone increasingly closed to foreign supply.

But that moat is starting to crack.

With Donald Trump's return to the White House in the 2024 election, First Solar's core advantage—policy support—faces erosion. On April 30, the company slashed its full-year revenue forecast to $4.5–5.5 billion and cut expected EPS to $12.5–17.5, citing weakening U.S. residential demand and retaliatory tariffs. Shares sank more than 10% on the day.

More troubling is the GOP's push to unwind the IRA. On May 19, Republican lawmakers proposed legislation to phase out clean energy tax credits—backed by House leadership and aligned with Trump's long-standing climate skepticism. If passed, the measure could strip First Solar of billions in future subsidies, unraveling the very financial scaffolding that has powered its recent growth. Shares fell another 8% following the news.

There are operational headwinds too. Despite patriotic messaging, First Solar sources materials and finished goods internationally, and is expanding capacity in India. New tariffs under Trump could inflate logistics and import costs by as much as $375 million, the company estimates.

While First Solar boasts a technology edge in thin-film and is investing in next-gen perovskite cells, its global competitiveness lags Chinese firms in scale, cost, and innovation speed. Outside the U.S., its market share remains marginal. Without the shelter of U.S. policy, analysts warn, its profitability could quickly unravel.

Capital expenditures have already ballooned amid new plant builds and automation upgrades. Cash reserves have nearly halved, while the company is sitting on a backlog five times its annual shipments. If those orders falter, so too could its outlook.

CEO Mark Widmar has doubled down on public appeals, urging lawmakers to preserve clean energy incentives for the sake of U.S. jobs and energy security. But with Washington's climate priorities entering a potential reversal, First Solar's path forward looks increasingly precarious.

Chinese competitors aren't holding back. One executive from a major PV player called First Solar a 「freak」—propped up by public funds and shielded from global price pressures. The company has also been a chief instigator of recent trade actions, including the successful petition to end tariff exemptions for Southeast Asian-made Chinese modules. The U.S. International Trade Commission ruled on May 20 that these imports harmed domestic industry, paving the way for new duties—once again benefiting First Solar.

Yet these victories may be Pyrrhic. As the policy pendulum swings, the very protections First Solar fought for may become liabilities in a world where global integration, not insulation, drives scale and efficiency.

For now, First Solar remains the most valuable U.S.-listed solar company. But whether it can sustain that crown in a post-IRA, post-Biden era is a question that looms large over the global energy transition—and over Wall Street.