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First Solar (NASDAQ:FSLR) jumps 19.2% in early trading as House Republicans opt to trim but preserve key solar and wind tax credits.
The House Ways and Means Committee's budget reconciliation bill keeps the Production Tax Credit and Investment Tax Credit untouched through 2028 before a gradual phase-down to 2032, a structure J.P. Morgan's Mark Strouse says aligns with or exceeds the more bullish end of investor expectations.
First Solar led sector gains with a 22.2% advance, while Array Technologies (NASDAQ:ARRY) rallied 22.1%, Maxeon Solar (NASDAQ:MAXN) climbed 16.3%, Shoals Technologies (NASDAQ:SHLS) gained 15.7% and Sunrun (NASDAQ:RUN) jumped 15.9%, even as Enphase (NASDAQ:ENPH) and SolarEdge (NASDAQ:SEDG) slipped.
Strouse notes that limits on products from foreign-influenced entities over the next two years could be a significant positive for First Solar, given that roughly 60% of its projected earnings through 2027 come from 45% ITC-eligible projects.
He also sees benefits for Nextracker (NASDAQ:NXT) and Array, a mild headwind for wind-blade supplier TPI Composites (NASDAQ:TPIC), and a modest negative for GE Vernova's (NYSE:GEV) small modular reactor arm as the 45u nuclear credit phases down, though GEV shares still rose 3.2%.
Why should investors care? First Solar's early rally underscores how policy tweaks, not wholesale cuts, can fuel a clean-energy rebound and tilt competitive advantage toward domestic suppliers.
Investors will watch Senate action on reconciliation and any tweaks to the foreign-entity clause when the bill moves to the floor.
This article first appeared on GuruFocus.