Will the 2025 solar energy sector rebound? Which is more worth investing in: US solar concept stocks or Taiwan's leading stocks?

Will solar energy stocks be able to make a fortune in 2025? This article guides you to decode the true face of this industry, through both fundamental and technical perspectives, to uncover high-quality benchmark companies in the US solar concept stocks and the Taiwan market.

Why the solar sector is optimistic now

Global net-zero commitments have fueled the clean energy market. Compared to wind and other renewable energies, solar has the following unique advantages:

• Abundant natural resources ─ Wide coverage of sunlight with minimal geographic restrictions
• Outstanding economic benefits ─ Low operational and maintenance costs after system installation, easy to maintain
• Rapid technological iteration ─ Continuous improvement in photovoltaic module efficiency, decreasing unit costs year by year, applicable from residential rooftops to multi-megawatt power plants

However, challenges such as policy variables, intensifying market competition, and rapid technological updates are also evolving simultaneously, determining who can survive longer in this cycle.

Overview of benchmark companies in Taiwan’s solar sector

Three key points for US solar concept stocks

1. Market size bottoming out and rebounding

According to the US Energy Information Administration(EIA) forecast, the US cumulative installed capacity of photovoltaics will surpass 182GW by 2026. Texas leads the pack, with an expected addition of 11.6GW in 2025, maintaining the top spot nationwide. At the federal level, the Inflation Reduction Act(IRA)’s tax credit policies remain strong, providing tangible incentives for businesses and households to invest in solar systems.

This forms an important foundation for the market rebound from the lows of 2024.

2. First Solar: A domestic manufacturing moat

Company overview ─ Founded in 1999, based in sunny Arizona. Specializes in thin-film photovoltaic modules, listed on NASDAQ(FSLR) in 2006.

Core competitiveness ─ Advanced thin-film technology performs significantly better in low-light and high-temperature environments compared to traditional silicon-based modules. Larger module sizes further reduce cost per watt, making it the first choice for utility-scale projects.

Policy benefits ─ IRA policies support domestic manufacturing, with high import tariffs on components. The company has signed long-term supply agreements with multiple US utilities, ensuring strong order visibility.

Valuation potential ─ Trefis analysis suggests that, under baseline scenarios with stable or 5% annual revenue growth and maintained profit margins, EPS could stabilize around $8, implying a reasonable valuation of 22-25x PE at $175-200, leaving room for upside from current prices. In optimistic scenarios, with Fed rate cuts and accelerated large projects, EPS could rebound to $10 in 2026, corresponding to a $250 target at 25x PE.

Analyst consensus ─ 26 Wall Street analysts’ average 12-month target price is $210.12 (current $166.35), implying a potential upside of 26.31%.

3. Nextracker: The hidden champion of solar tracking systems

Business core ─ Provides intelligent tracking systems for utility-scale solar power plants, maximizing power generation by real-time adjustment of PV panel orientation.

Recent performance ─ Q1 seasonal report on May 15 exceeded expectations, stock price surged 12% and remained high. Management emphasizes strong global demand for solar solutions and plans to increase strategic investments.

Analyst expectations ─ 18 analysts’ average 12-month target price is $63.94 (current $56.92), with a potential increase of 12.33%.

4. Enphase Energy: The new energy empire of microinverters

Company trajectory ─ Founded in California in 2006, listed in 2012(ENPH). Started with microinverters, now expanded into battery storage and energy management software, offering integrated residential energy solutions.

Short-term pressures ─ US-China tariff disputes impact significantly. 95% of the company’s lithium iron phosphate(LFP) cells depend on Chinese supply, with gross margin expected to be pressured by 200 basis points in Q2 2025, further widening to 600-800 basis points in Q3.

Long-term outlook ─ Actively diversifying supply chains, aiming to shift most battery supplies from China to other sources before Q2 2026.

Target price assessment ─ 25 analysts’ average target is $50.82 (current $41.18), with a potential upside of 23.41%.

Leading players in Taiwan’s solar concept stocks

Delta Electronics: The versatile player in industrial power solutions

In 2024, Delta Electronics’ revenue reached 421.1 billion TWD, up 5% annually, with a gross margin of 32.4%. Net profit after tax was 35.2 billion TWD, EPS 13.56 TWD, and ROE remained stable at 16.4%, indicating a solid performance.

The latest highlight is Morgan Stanley’s optimism. The firm raised its target price from NT$440 to NT$485, maintaining an overweight rating, focusing on the company’s breakthroughs in high-voltage DC(HVDC) power solutions for AI data centers and industrial applications. Morgan Stanley expects that as global demand for high-end power supplies continues to grow, Delta’s growth momentum could extend into 2027.

( Chung-Hsin Electric: Beneficiary of Taiwan Power’s resilient grid project

In 2024, Chung-Hsin Electric’s net profit was NT$3.623 billion, a significant 128% increase from last year, setting a new record. EPS reached NT$7.33, also a new high.

In Q1 2025, driven by orders from Taiwan Power’s resilient grid project, revenue hit NT$6.448 billion, a new high. Although gross margin was pressured by increased engineering project share, quarterly EPS was NT$1.78 (vs. NT$1.93 last year), still the second-highest for the same period.

FactSet survey shows six analysts raised Chung-Hsin Electric’s median target price from NT$182.5 to NT$195.5, a 7.12% increase. The highest valuation is NT$211, the lowest NT$167.

A brief history of the solar industry evolution

The story of solar energy began in 1839 when French scientist Edmond Becquerel discovered the photovoltaic effect. It wasn’t until 1954 that Bell Labs developed the first practical silicon-based photovoltaic cell with only 6% efficiency, marking the start of the practical era of solar energy.

In the 1960s, US space programs propelled the industry, with NASA applying solar cells to satellites, driving technological iteration. The 1970s energy crisis swept the globe, creating demand for alternative energy sources, and solar gained unprecedented attention, though costs remained high. It wasn’t until the 1990s, with technological advances and scale expansion, that costs started to decline.

Entering the 21st century, the solar industry experienced explosive growth. China, leveraging capital intensity and policy support, became the largest producer and consumer worldwide, with PV module costs plummeting. In 2021, according to IEA data, solar and wind energy became the cheapest power sources in most regions globally.

The decade-long roller coaster of solar ETFs

The price evolution of the representative Invesco Solar ETF)TAN### fully reflects the industry’s opportunities and challenges across different cycles.

2008-2009: TAN launched during a peak in industry investment, with aggressive subsidies worldwide, attracting many renewable energy companies. However, the 2008 financial crisis, coupled with economic recession and low-cost Chinese exports, burst the industry bubble, causing sharp declines in individual stocks.

2010s: Technological progress and cost reductions made solar more economical. But frequent policy changes (US anti-dumping tariffs on Chinese modules, overcapacity issues) and intensified competition caused TAN volatility. Later, with stronger global climate consensus and corporate carbon reduction commitments, the industry regained growth momentum, and TAN prices stabilized and modestly rebounded.

Post-2020: The pandemic initially hit the global economy, but with vaccine rollouts and green stimulus plans, solar industry regained favor, reaching a decade-high in TAN.

2024 situation: US solar industry faces multiple challenges. Utility-scale growth remains strong, but residential solar market declined 32%. Macroeconomic headwinds (high interest rates, Chinese competition) caused widespread losses. Support policies like IRA face uncertain futures, highlighting industry vulnerability to policy. TAN fell 37.62% for the year.

Individual stocks show divergence: SunPower plunged 70% and faced bankruptcy; SolarEdge halved from nearly $80 to below $20; First Solar demonstrated resilience with slight gains for the year.

Investment logic for 2025

US solar concept stocks rebounded from the lows of 2024, but this is not a simple bottoming process. Support from IRA policies, domestic manufacturing resurgence, and the long-term trend of global net-zero transition are strong pillars. Meanwhile, supply chain diversification, continuous reduction in technological costs, and stable growth of utility-scale projects are improving industry fundamentals.

Leading Taiwan solar concept companies benefit from Taiwan’s new energy infrastructure investments and global order shifts. Delta’s high-end power solutions, Chung-Hsin’s grid projects, and China Rental-KY’s undervaluation each have their own investment logic.

The key is to identify true leaders—companies with moats, cash flow, and order visibility—rather than concept stocks driven solely by policies.