Key Takeaways

• First Solar was the best-performing stock in the S&P 500 for a second straight day on Wednesday after analysts at UBS raised their price target on the stock, citing its potential to benefit from big tech companies' investments in artificial intelligence (AI).
• Analysts suggested Microsoft and other hyperscalers may rely on renewable energy companies like First Solar to satisfy AI demand and meet their carbon neutrality goals.
• First Solar could also benefit from Inflation Reduction Act tax credits.

First Solar (FSLR) was the best-performing stock in the S&P 500 for a second consecutive day on Wednesday after UBS analysts on Tuesday said the company stands to benefit from the proliferation of energy-hungry data centers to support artificial intelligence (AI). 

"In our view, FSLR is an overlooked, direct beneficiary of increasing AI-driven electricity demand," a team of analysts led by Jon Windham reportedly wrote.1

Artificial intelligence is power intensive and many of the big tech companies investing in it, like Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL), have made carbon neutrality pledges. 

Microsoft, which has vowed to be carbon neutral by 2030, last week reported that its carbon emissions in 2023 were 29% higher than in 2020 primarily because of the company's investments in the data centers required to train and run AI models.2

"Under '100% Renewable' sustainability policies the large tech companies match their nonrenewable electricity consumption through Power Purchase Agreements (PPAs)," the analysts wrote.3

First Solar, one of America's largest solar tech companies, could stand to benefit, especially if it can continue to grow its market share at home, as UBS analysts project. Analysts anticipate AI spending, increasing U.S. protectionism, and tax credits enacted by the Inflation Reduction Act, could help lift First Solar's earnings to nearly $37 per share in 2027 from $7.74 in 2023. 

First Solar also got a boost from Piper Sandler analysts, who raised their price target on the stock to $219 from $195 on Monday. 

Shares of First Solar finished over 18% higher at $251.75 Wednesday, and have gained more than 46% since the start of the year. 

https://www.investopedia.com/first-solar-stock-soars-after-analysts-dub-it-an-ai-play-8652589?hid=7d53a082c3d3b43125df9a9a22721511622d4939&did=13120840-20240522&utm_campaign=investopedia-daily-post_newsletter&utm_source=investopedia&utm_medium=email&utm_content=052224&lctg=7d53a082c3d3b43125df9a9a22721511622d4939&lr_input=3790acc294caf184d9cd91158cb693bd3c62aa961ad91341e4cf01ce615a901e

First Solar Stock Soars Over 18% After Analysts Dub It an AI Play

Justin Sullivan / Getty Images

Key Takeaways

• First Solar was the best-performing stock in the S&P 500 for a second straight day on Wednesday after analysts at UBS raised their price target on the stock, citing its potential to benefit from big tech companies' investments in artificial intelligence (AI).
• Analysts suggested Microsoft and other hyperscalers may rely on renewable energy companies like First Solar to satisfy AI demand and meet their carbon neutrality goals.
• First Solar could also benefit from Inflation Reduction Act tax credits.

First Solar (FSLR) was the best-performing stock in the S&P 500 for a second consecutive day on Wednesday after UBS analysts on Tuesday said the company stands to benefit from the proliferation of energy-hungry data centers to support artificial intelligence (AI). 

"In our view, FSLR is an overlooked, direct beneficiary of increasing AI-driven electricity demand," a team of analysts led by Jon Windham reportedly wrote.1

Artificial intelligence is power intensive and many of the big tech companies investing in it, like Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL), have made carbon neutrality pledges. 

Microsoft, which has vowed to be carbon neutral by 2030, last week reported that its carbon emissions in 2023 were 29% higher than in 2020 primarily because of the company's investments in the data centers required to train and run AI models.2

"Under '100% Renewable' sustainability policies the large tech companies match their nonrenewable electricity consumption through Power Purchase Agreements (PPAs)," the analysts wrote.3

First Solar, one of America's largest solar tech companies, could stand to benefit, especially if it can continue to grow its market share at home, as UBS analysts project. Analysts anticipate AI spending, increasing U.S. protectionism, and tax credits enacted by the Inflation Reduction Act, could help lift First Solar's earnings to nearly $37 per share in 2027 from $7.74 in 2023. 

First Solar also got a boost from Piper Sandler analysts, who raised their price target on the stock to $219 from $195 on Monday. 

Shares of First Solar finished over 18% higher at $251.75 Wednesday, and have gained more than 46% since the start of the year. 

Pete and Tess