For the first time in its history, the digital economy faces a true energy bottleneck. Artificial intelligence and the hyperscale data centers that support it are so compute and power hungry that the existing US grid is straining to keep up and may soon be unable to meet demand.

To put this into perspective: the largest hyperscale campuses are now approaching 1 gigawatt (GW) of demand, nearly a tenth of the electricity New York City uses on a peak summer day. Meta is even planning a 5 GW campus, and forecasts suggest that US data centers could eventually consume a quarter of the nation’s electricity capacity, requiring the grid to add the equivalent of several New York Cities just to keep pace. Today, data center power usage sits around 55 GW, ~4% of total electricity output, and is expected to reach 85 GW by 2027. This number is expected to surge to 300 GW by 2030. With the US grid capacity at about 1,250 GW, that would mean AI data centers alone could absorb nearly 25% of total capacity.

So far, the conversation has revolved around nuclear and natural gas as solutions to this energy crunch. But one overlooked source is starting to show real potential is solar power. Multiple catalysts are aligning that could finally make solar a serious contender to help fuel the AI revolution, and savvy investors are beginning to take notice.

In the sections below, I’ll explain why solar could emerge as a critical piece of the AI energy puzzle and highlight several solar stocks that look especially well positioned, including SolarEdge Technologies ((SEDG Quick QuoteSEDG - Free Report) ),Nextracker Inc. ((NXT Quick QuoteNXT - Free Report) ),Sunrun ((RUN Quick QuoteRUN - Free Report) ),Array Technologies ((ARRY Quick QuoteARRY - Free Report) ), and Shoals Technologies Group ((SHLS Quick QuoteSHLS - Free Report) ). It’s worth noting that solar names have already been quietly rallying this year, yet they still trade at depressed valuations after years of weak price action, setting the stage for what could be a powerful breakout if this theme catches on.

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Solar Power’s Latent Opportunities

I have long been skeptical of solar energy, but for the first time I’m changing my tune. The industry has matured, the business economics have improved dramatically, and the urgent need for scalable, easy-to-deploy power sources has never been greater.

Economic gains: Over the past decade, photovoltaic (PV) costs have dropped by roughly 90%, following the well-documented “learning curve” where costs decline about 20% each time global capacity doubles. Today, in many sunny regions, solar is already cheaper than coal or natural gas, both in upfront capital costs and ongoing operating expenses.

Battery technology: Storage is also catching up quickly. Lithium-ion battery pack costs fell 20% in the past year alone, hitting a record low of $115 per kWh. With battery costs down nearly 90% over the last decade, pairing solar with storage is rapidly becoming both technically viable and economically attractive, allowing solar to provide reliable 24/7 power.

Despite these advances, solar stocks still trade at depressed valuations after several years of severe underperformance, even though the economics have never been more compelling. With costs collapsing, storage breakthroughs accelerating, and demand from AI-driven data centers looming, the industry is at the edge of a major inflection point. For investors, this combination of improved fundamentals and beaten-down stock prices creates one of the more attractive opportunities in the entire clean energy space today.

How Big Could the Solar Industry Get?

Here, I want to share some very rough but eye-opening estimates on the growth potential of solar. Even under conservative assumptions, the opportunity is enormous.

A standard rule of thumb is that it takes about 10 acres of solar panels to generate 1 MW of power. That means a 1 GW hyperscale data center campus, the kind tech giants are now building to run AI workloads, would need 7,000 to 10,000 acres of panels, or roughly 11 to 15 square miles of land if powered entirely by solar.

Looking ahead, forecasts suggest US data centers could demand 130 GW of continuous power by 2030. To meet that with solar alone would require between 580 and 870 GWdc (gigawatts direct current) of new solar capacity, depending on efficiency. For context, the entire US solar fleet today stands at about 235 GWdc, meaning the industry would need to triple or quadruple in size within just a few years.

That buildout would represent hundreds of billions of dollars in new investment, potentially exceeding $1 trillion when paired with storage, and it would transform the economics of the entire solar supply chain. For investors, that scale of growth underscores why the sector, despite its current depressed valuations, could be sitting on one of the most powerful demand cycles in its history.

Solar Stocks to Buy (SEDG, NXT, RUN, ARRY, SHLS)

It’s hard to overstate how attractive solar stocks look right now, even without considering the potential AI infrastructure catalyst. The industry as a whole is seeing improving business economics, strong growth forecasts, and valuations that range from reasonable to deeply discounted. Just as important, the stocks highlighted here have already shown powerful momentum year-to-date.

SolarEdge Technologies: Once a market darling, SolarEdge has been beaten down amid margin pressure and slowing residential demand. However, with shares trading at depressed valuations and demand for utility-scale inverters likely to rebound, SEDG offers contrarian upside if execution improves.

Though it isn’t yet reflected by the Zacks rank, SEDG currently has a Zacks Rank #3 (Hold) rating, it has experienced some significant revisions higher to its earnings estimates. Though still negative, estimates have risen across the board with FY26 forecasts climbing by 68% in the last 60 days. Sales are also projected to grow by more than 24% both this and next year, showing strong demand expectations for the company’s inverters.

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Nextracker Inc.: As the leading provider of solar trackers, Nextracker directly benefits from the shift to utility-scale projects. Its technology boosts panel efficiency and lowers costs, making it a natural winner as large-scale solar buildouts accelerate. The stock has moved significantly higher this year, up 85%, yet the company still trades at just 16.6x forward earnings.

Sunrun: A pure play on residential solar, Sunrun has struggled under higher interest rates. But as financing conditions ease and consumer adoption of solar-plus-storage grows, RUN could be positioned for a strong recovery. Based on recent revisions, earnings are expected to inflect meaningfully positive over the next year.

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Array Technologies: Like Nextracker, Array builds solar tracking systems that enhance utility-scale efficiency. With a global footprint and strong backlog, ARRY offers solid exposure to the utility-scale solar buildout at a reasonable valuation.

With earnings projected to grow 21.6% annually over the next three to five years and a forward earnings multiple of 14.2x, Array boasts a PEG ratio of 0.66. The combination of strong growth and reasonable valuation offers a compelling risk reward opportunity.

Shoals Technologies Group: Shoals specializes in balance-of-system components — wiring, connectors, and infrastructure that every solar farm needs. Its recurring demand base and high margins make it a steady, less flashy way to play the solar boom.

Shoals Technologies Group is in an especially advantaged vertical and is the only name in the group with a Zacks Rank #2 (Buy) rating, reflected by upward trending earnings revisions. The stock also made YTD highs this week and has a PEG ratio of 0.75, potentially limiting downside risk.

Solar’s Role in Powering the AI Revolution

At this point, the cost of energy infrastructure is a relatively minor factor in the overall buildout of AI, as GPUs and advanced chips account for the bulk of expenses. The greater challenge lies in regulatory and permitting delays as well as industry adoption, which can hold back solar and storage projects far more than cost competitiveness. Ironically, fossil fuel infrastructure often faces fewer hurdles than renewables, creating a hurdle that policymakers will need to address if the US wants to meet AI-driven power demand with clean energy.

For investors, however, the opportunity is clear. The economics of solar and storage have never been stronger, valuations remain depressed after years of underperformance, and a once-in-a-generation demand catalyst is emerging as AI transforms the global economy. If AI data centers really do scale toward hundreds of gigawatts of demand, solar will almost certainly claim a portion, and potentially large share of that market, making now an opportune timeto consider exposure to the sector before the market fully prices in this growth.