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Why Solar Could Be the Next Big AI Winner

Artificial intelligence is creating the first true energy bottleneck in the history of the digital economy. Hyperscale data centers are so compute and power hungry that the US grid is already straining to keep up. To put it in perspective: the largest campuses now approach 1 gigawatt (GW) of demand, with some hyperscalers already talking about 5 GW campuses. Current forecasts suggest US data centers could consume up to a quarter of the nation’s electricity capacity by 2030, rising substantially from the 4% they consume today.

So far, much of the focus has centered on nuclear and natural gas as solutions. But one overlooked contender is now stepping into the spotlight: solar power. Costs for photovoltaic panels have fallen nearly 90% over the last decade, while battery storage prices are also collapsing, making solar not just technically viable but increasingly the most scalable and cost-effective option. With hyperscalers under pressure to secure renewable energy, solar is emerging as a key piece of the AI energy puzzle.

Though the sector has been beaten up in the last few years, the Invesco Solar ETF (TAN - Free Report)  is 70% off its 2021 highs, momentum has quietly picked up this year. Along with the ETF, a handful of stocks in the sector are attracting significant buying. Shoals Technology Group ((SHLS - Free Report) ), Array Technologies ((ARRY - Free Report) ) and Nextracker Inc. ((NXT - Free Report) ) are three such names which appear extremely well positioned for this trend.

Zacks Investment Research
Image Source: Zacks Investment Research

The Solar Stock Opportunity in the AI Era

Solar’s economics have never looked stronger. In many regions, solar is already cheaper than coal or natural gas, and when paired with modern storage, it can provide reliable 24/7 power. Despite these gains, solar stocks remain depressed after years of underperformance, creating what could be one of the most attractive entry points in the entire clean energy space.

The potential scale is enormous. By 2030, US data centers could demand 130 GW of continuous power. Meeting that with solar alone would require tripling or quadrupling current US capacity, representing potentially hundreds of billions in new investment when paired with storage. For investors, this underscores why solar could be one of the biggest long-term beneficiaries of the AI revolution.

And while the narrative for this burgeoning trend is compelling, what really has made me excited about the stocks in this sector is the technical setups in the charts, which I cover below.

Nextracker Inc.: Stock Forming a Bull Pattern

As the leading provider of solar trackers, Nextracker would directly benefit from the shift to utility-scale solar 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 more than 80%, yet the company still trades at just 16.6x forward earnings.

NXT stock is forming an interesting technical pattern here. On Tuesday morning, we can see the stock gapped lower as the broader market sells off. However, buyers are clearly stepping in, and they are doing so right at a key level of support. We can see a clear bull flag forming over the last couple of weeks, and if the stock can materially trade above the breakout level of $68.60, it should start another bull run.

TradingView
Image Source: TradingView

Array Technologies: Shares Gain Following Breakout

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.

Earnings are projected to grow 21.6% annually over the next three to five years, and with 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.

ARRY stock is also forming a compelling bullish wedge. After breaking out from a major bull flag, this tidy technical pattern appears to be on the verge of initiating a strong continuation move. Above the $9.10 level and Array stock should rally again.

TradingView
Image Source: TradingView

Shoals Technologies Group: Stock Rallies on Rising Estimates

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 notably 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.

SHLS stock also looks especially compelling from a technical perspective. Today, while the broad market rolls over, and even the solar sector is down slightly, Shoals is showing relative strength and some nice gains on the day, indicating strong buying activity. This bull flag appears to be on the verge of breaking higher, and if the stock can trade above the $6.75 level, it should go on a bull run.

TradingView
Image Source: TradingView

Should Investors Buy Shares in SHLS, ARRY and NXT?

AI is rewriting the rules of the digital economy but powering it may prove just as critical as building it. Solar stands out as a scalable, cost-effective, and increasingly necessary solution to the data center energy crunch. Despite years of underperformance, stocks like Shoals Technologies Group, Array Technologies, and Nextracker Inc. are showing renewed strength, both fundamentally and technically. With valuations still reasonable, growth forecasts accelerating, and bullish technical setups forming, these names offer investors some of the most compelling entry points in the clean energy sector today.

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