Is Now the Optimal Time to Buy First Solar (FSLR) Ahead of 2026 Growth Catalysts?

The renewable energy sector is undergoing a seismic shift, driven by regulatory tailwinds, surging demand for clean power, and technological innovation. First Solar (NASDAQ: FSLR) has emerged as a pivotal player in this transformation, leveraging its vertically integrated model, proprietary technology, and strategic positioning in the U.S. market. With a 79.7% year-on-year revenue growth in Q3 2025, a $1.2 billion liquidity boost, and improving gross margins, the company appears poised to capitalize on 2026 growth catalysts. However, investors must weigh these positives against risks like ASP pressure and Southeast Asia production challenges.

Growth Catalysts: Manufacturing Expansion and Regulatory Tailwinds

First Solar's aggressive capital expenditure plans-$0.9 billion to $1.2 billion in 2025-underscore its commitment to scaling production capacity. These investments will support new facilities, R&D, and equipment upgrades, enabling the company to deliver 16.7–17.4 GW of solar modules by year-end 2025. A 3.7 GW U.S. manufacturing facility, slated for late 2026, further cements its domestic leadership.

Regulatory tailwinds are equally significant. The One Big Beautiful Bill Act (OBBBA) has introduced Foreign Entity of Concern (FEOC) restrictions, limiting competition from foreign manufacturers-particularly Chinese firms-by restricting their access to U.S. markets. This creates a favorable environment for First Solar, which already produces 50 GW of its 64–66 GW backlog domestically. Analysts project First Solar's earnings per share (EPS) to surge from $12.22 in 2024 to $31.17 by 2027, driven by higher average selling prices (ASPs) and reduced foreign competition.

Financial Strength: Revenue Surge and Liquidity

First Solar's Q3 2025 revenue of $1.59 billion reflects a 79.7% YoY growth, outpacing peers and marking the fastest revenue expansion in the renewable energy sector. This growth was fueled by a 5.3 GW increase in module sales volume and a 38% gross margin. The company's liquidity position has also strengthened, with a $2 billion gross cash balance as of Q3 2025, bolstered by improved working capital and new bookings.

While gross margins have shown volatility-dipping to 37.49% in Q4 2024 and 40.78% in Q1 2025-recent improvements, including a 38% margin in Q3 2025, suggest a recovery amid cost optimization and higher ASPs.

Competitive Advantages: Technology and Vertical Integration

First Solar's proprietary cadmium telluride (CdTe) thin-film technology distinguishes it from competitors reliant on crystalline silicon (c-Si). This technology enables faster energy payback times and lower environmental impact, aligning with decarbonization goals according to market analysis. The company's vertical integration-from manufacturing to project development-also enhances margins and reduces supply chain risks.

The FEOC restrictions have further amplified First Solar's competitive edge. By limiting imports from Chinese manufacturers like JinkoSolar and LONGi, the policy has created a vacuum for U.S.-based producers. First Solar's domestic production capacity and strategic partnerships position it to dominate this niche as reported in industry analysis.

Analyst Consensus: Strong Buy Momentum

Analyst sentiment is overwhelmingly bullish. Of 26 analysts covering the stock, 50% have issued "Strong Buy" ratings, with EPS growth expectations of 58.36% in 2026. The company's strong backlog, regulatory tailwinds, and expanding U.S. demand-projected to grow by 50% over the next 25 years-support these projections.

Risks: ASP Pressure and Southeast Asia Challenges

Despite these positives, risks persist. First Solar's ASP in Q3 2025 averaged $0.309 per watt, but production issues in Malaysia and Vietnam-due to customer defaults and supply chain disruptions-forced a 200 MW production cut and a lower ASP of $0.29 for some modules. These challenges highlight vulnerabilities in its Southeast Asia operations, prompting the company to accelerate U.S. production shifts.

Additionally, trade policy and tariff changes could disrupt margins. While First Solar's domestic focus mitigates some of these risks, prolonged regulatory uncertainty remains a headwind.

Conclusion: A Compelling Case for Long-Term Investors

First Solar's alignment with U.S. renewable energy policy, technological differentiation, and robust financials make it a compelling investment ahead of 2026. The 79.7% YoY revenue growth, $1.2 billion liquidity buffer, and improving gross margins underscore its resilience. While ASP pressure and Southeast Asia utilization issues warrant caution, the company's strategic pivot to U.S. manufacturing and regulatory tailwinds suggest these risks are manageable. For investors seeking exposure to a leader in the clean energy transition, First Solar offers a rare combination of value and growth.