Analysts at UBS say First Solar is uniquely positioned to benefit from the increased demand for electricity driven by artificial intelligence as Big Tech companies seek clean energy to power the proliferation of data centers. First Solar's earnings are expected to rise 374% to $36.74 per share in 2027, analysts led by John Windham told clients in a research note Tuesday. UBS raised its price target for First Solar by $18 to $270 per share, suggesting an upside of about 38% from Monday's closing price. “In our view, FSLR is an overlooked and direct beneficiary of increased power demand driven by AI,” Windham and his team told customers in a note. According to UBS, AI uses 10 times more power than traditional Google search. Amazon, Microsoft, Meta, and Alphabet's Google division are all working to buy more renewable power to match their consumption as AI demands more power. According to UBS, 80% of corporate power purchase agreements in the past five years have been for utility-scale solar PV, and four high-tech companies account for 40% of utility-scale solar demand. First Solar's share of the utility scale market grew from 15% in 2018 to 35% in 2022, the bank said. U.S. protectionism, IRA benefits UBS has previously positioned First Solar as a high-cost domestic supplier at a disadvantage to low-cost Chinese suppliers that dominate the global solar power market and supply chain. I thought it was a solar power module manufacturer. But First Solar is looking increasingly attractive due to U.S. tariffs on China and domestic manufacturing tax credits under the Anti-Inflation Act, according to UBS. “Many people (sometimes including us) thought FSLR was a fundamentally flawed technology,” Windham told customers. “We believe that is the wrong framework for today's world.” First Solar makes thin-film solar modules, rather than silicon-based modules, which China has a global monopoly on. According to UBS, this may have been a disadvantage in the past due to cost, but with U.S. protectionism targeting Chinese silicon modules, First Solar now has a competitive technological advantage. It is said to have a sexual nature. First Solar is vertically integrated with its own supply chain, sourcing only glass and some raw materials from other suppliers. UBS says this will allow it to ramp up production capacity faster than competitors that rely on fragmented supply chains. The bank predicts First Solar's production capacity will jump to 13.1 gigawatts by 2030, up from 3.9 gigawatts last year. First Solar makes most of its modules at a factory in Ohio, and plans to triple its production capacity with new factories planned for Alabama and Louisiana. This allows First Solar customers to benefit from a 10% domestic content tax credit under the IRA, which is worth approximately 10 cents per watt of solar power. “Furthermore, in our view, FSLR is considered a 'risk-free' product when compared to the growing U.S. tariff litigation that imports face,” Windham said. “FSLR is also a hedge against potential weaknesses in the ‘sustainability’ of China’s silicon-based solar power supply chain.” Goldman Sachs also reported strong first quarter for First Solar As a result, we are bullish on First Solar, raising our price target to $268, implying a 36% upside from Monday's closing price. “Our demand forecast has increased significantly, due in part to increased data center loads,” First Solar CEO Mark Widmer told analysts during an earnings call. Chief Financial Officer Alexander Bradley said First Solar will be the “preferred supplier to projects that will power these data centers.”
