We recently published a list of 10 Best Solar Stocks to Buy in 2025. In this article, we are going to take a look at where First Solar Inc. (NASDAQ:FSLR) stands against other best solar stocks to buy in 2025.
Solar energy has become a key driver in the global shift toward sustainable power. It plays a crucial role in reducing greenhouse gas emissions, enhancing energy security, and fostering economic growth. By harnessing solar power, nations can reduce their reliance on fossil fuels, lowering their exposure to volatile energy markets. Moreover, with its low carbon footprint, solar energy is also a key solution for fighting climate change.
According to the International Energy Agency (IEA), declining costs have led to a surge in solar photovoltaic (PV) adoption. Over the past five years, global solar capacity has tripled. Between 2024 and 2030, solar PV is projected to drive 80% of the world’s renewable energy expansion, driven by large-scale solar farms and increased rooftop installations. By the end of the decade, solar is expected to surpass wind and hydropower as the dominant renewable energy source.
Solar Market Trends and Challenges
Wood Mackenzie’s 2025 solar market report, Solar: predictions for 2025, highlights that global installed capacity reached 495 GW in 2024, marking a 14% increase from the previous year. The rising demand for electricity, fuelled by data centers and electrification trends, continues to support this expansion. However, political shifts following the 2024 elections could introduce policy uncertainties, affecting renewable energy incentives. In mature markets, the reduction of financial support, such as feed-in tariffs and capital expenditure rebates, may slow growth after years of rapid acceleration.
Despite concerns over market saturation, a shift is taking place in 2025. Overcapacity in solar module manufacturing has led top producers to limit supply, with major polysilicon manufacturers reducing production and module makers setting price floors. This suggests the market could shift back in favor of suppliers.
Looking beyond short-term fluctuations, Deloitte’s 2025 Renewable Energy Industry Outlook expresses confidence in solar’s long-term trajectory. Their research found that solar was the only major energy source to record significant capacity growth, surging 88% to 18.6 GW. By the end of 2024, solar overtook hydropower and nuclear to become the fourth-largest source of installed capacity, trailing only wind, natural gas, and coal. The US Energy Information Administration (EIA) also projects record-breaking additions in 2024, with solar capacity expected to grow by 38.4 GW, far exceeding the 6.5 GW increase expected for wind power.
In summary, solar energy has become a key part of the global shift toward cleaner power. Its fast growth is fuelled by new technology, lower costs, and supportive policies. However, future progress will depend on addressing policy uncertainties and infrastructure challenges. With ongoing innovation and strong government support, solar energy is set to remain a major player in the clean energy transition. Keeping this in mind, let’s explore our top picks for the best solar stocks to buy in 2025.
Our Methodology
To identify the stocks, we began by compiling a list of solar companies with a market capitalization of at least $500 million. This was done using online stock screeners, solar-focused ETFs, and financial media reports. Next, we filtered the list to include only those stocks with an upside potential of at least 10%. From this refined selection, we identified the top 10 stocks with the highest hedge fund ownership, leveraging data from Insider Monkey’s Q4 2024 hedge fund database. Finally, we ranked these stocks in ascending order based on the number of hedge funds holding positions in them.
Note: All pricing data is as of market close on March 20.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A solar panel farm with an orange sky illuminating the vast landscape.
First Solar Inc. (NASDAQ:FSLR)
Upside Potential: 94%
Number of Hedge Fund Holders: 65
At the top of our list is First Solar Inc. (NASDAQ:FSLR), which is a global provider of solar energy solutions, specializing in thin-film photovoltaic (PV) modules. Its proprietary cadmium telluride (CdTe) technology offers higher efficiency and cost benefits compared to traditional silicon-based panels. With a market capitalization of nearly $14 billion, it is one of the largest solar-focused companies.
By the end of 2024, First Solar achieved approximately 21 gigawatts (GW) of global nameplate manufacturing capacity, an increase of over 4 GW from 2023, driven by the new Alabama facility and optimized throughput in Ohio. The company is also building a $1.1 billion manufacturing facility in Louisiana, set to begin operations in the second half of 2025. This facility will boost total capacity to over 25 GW by 2026. For FY 2025, First Solar projects revenue between $5.3 billion and $5.8 billion, reflecting a 32% year-over-year growth.
However, despite steady Q4 2024 results, the company reported quality issues in some products, leading to increased warranty expenses, potentially reaching $100 million, which has raised concerns among analysts.
In light of the company’s 2025 outlook, a Barclays analyst factored that impact into his estimates and revised the price target for First Solar Inc. (NASDAQ:FSLR), reducing it from $273 to $236 while retaining an Overweight rating on the stock. According to the analyst, India’s operations are expected to achieve their full production capacity, whereas facilities in Malaysia and Vietnam are anticipated to fall short. Additionally, costs indirectly related to First Solar’s warranty issues are projected to increase the cost per watt sold beyond prior guidance for 2025. This, in turn, has led the analyst to lower gross margin forecasts.
Overall, FSLR ranks 1st on our list of best solar stocks to buy in 2025. While we acknowledge the potential of FSLR to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FSLR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.