Washington announced Section 232 solar tariffs on August 6, 2026, setting a $0.38-per-watt minimum import price on finished modules and a 15% tariff on certain polysilicon derivatives, effective December 4. The solar sector had a mixed response, with First Solar, Inc. (NASDAQ:FSLR) shares coming under pressure. The stock now trades near $204, about 36% below its high and at approximately 12 times earnings. That is the paradox. First Solar is the largest domestic module manufacturer, and its cadmium-telluride panels contain no polysilicon. This means that the same rules that punish importers protect its pricing. On August 26, BMO’s Ameet Thakkar upgraded it to Outperform with a $263 target, arguing the sell-off overlooked this structural advantage.
The Tariffs Skip First Solar and Hit Everyone Else
The mechanism is unusually clean. First Solar’s thin-film process deposits its semiconductor directly onto glass, skipping the polysilicon, wafers, and crystalline cells that the proclamation taxes. Covered imported crystalline-silicon modules will generally face the $0.38 floor and the 15% duty. BMO expects those rules to push US module prices toward $0.43–$0.44 per watt. Meanwhile, it provides First Solar an opportunity to lock in 2029 volumes at better prices. The company publicly backed the Section 232 action, which tells you who benefits.
Cheap, With the Backlog to Match
The numbers underneath are not those of a loser. First Solar reported second-quarter EPS at $3.92 against a $2.84 estimate. The company’s gross margin ran near 57%, and adjusted EBITDA hit $644 million. In its earnings call, the company also reaffirmed full-year shipments of 17–18.2 GW alongside a contracted backlog of 45.1 GW, worth approximately $13.6 billion, stretching through 2030. Most of this backlog is committed at pre-tariff rates. As a result, higher average selling prices will apply primarily to new contract bookings. At 12 times earnings, the stock is priced like a cyclical in trouble despite contracted production running through 2030.
Why It’s a Debate, Not a Layup
Skeptics hold several valid arguments. First Solar’s Malaysia and Vietnam plants are underutilized, carrying $115–$135 million of ramp and underutilization costs. Additionally, margins are expected to hit a low point through 2027 as higher warehousing costs and normalizing prices weigh on it. Series 6 warranty litigation, earlier guidance reductions, and policy shifts contributed to the 36% valuation decline. Institutional data shows 64 hedge funds held the stock in Q2 2026, down slightly from 67 in Q1. High short interest at 11.5% of the float creates potential for a sharp upswing if contract pricing improves.
Bottom Line
The trade policy landscape provides clear tailwinds for First Solar, Inc. (NASDAQ:FSLR), and at 12x with a 45-gigawatt backlog, the domestic winner is priced like a casualty. But the 2027 margin trough is real, so this is a stock to accumulate into the trough with patient capital rather than as a quick rebound trade. What needs to be monitored is the realized pricing on 2029 contract bookings after Section 232 takes effect on December 4. If prices increase while the margin trough matches downside expectations, the contrarian bull case will be validated. On the other hand, worsening international factory underutilization and litigation could steer the company away from recovery, regardless of tariff support.
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