Did First Solar's Fall Catch You Out? What Investors Missed

If you had decided on 1 January 2026 to avoid First Solar after reading upbeat arguments about domestic factories, tax credits, and a swelling backlog, that choice sidestepped a painful outcome. For First Solar shareholders, the loss from the start of the year was 37.1%, including dividends. With record sales later reported but multiple class actions also filed, which early red flag or assumption from those 2025 analyst debates most deserved closer scrutiny?

The useful thing about a Narrative is that the reasoning is checkable: the assumptions sit beside the argument, and together they imply an estimated Fair Value you can disagree with.

This theme extends beyond First Solar. See which of 41 power grid technology and infrastructure stocks may still merit a closer look.

The First Solar Narratives Investors Were Choosing Between

The shares cost US$261 at the start of the period, and anyone looking at First Solar then was weighing two stories that both sounded reasonable.

The bull narrative set Fair Value at US$283. It leaned on rapid U.S. manufacturing expansion, a massive contracted backlog tied to utility projects, and an assumption that earnings could reach US$4.5b by around 2028 on higher margins.

The bear case still saw upside but marked Fair Value at US$220. That view accepted domestic policy support, yet focused on trade uncertainty and the risk that intense price competition could pressure the assumed 45.7% profit margin.

What The First Solar Evidence Actually Tested

Record Q1 2026 sales and a backlog near 48 GW gave the bullish First Solar story concrete support on demand and capacity, while Q2 2026 results showed revenue lower than Q2 2025 but net income and net margin higher at 40.0%. Multiple class actions over tariff disclosures challenged the idea that policy risk and contract quality were comfortably contained. Overall, the evidence cut both ways.

The central assumption was that policy aided growth without adding much fragility. For another stock, you would test that by comparing any policy-heavy story with actual margins, backlog stability, and new litigation disclosures each quarter.

What First Solar’s Drop Leaves You Paying For Today

First Solar now trades at US$173, with the year to date return down 37.1% from US$261. The selected Narrative still places its Fair Value above the current price, grounded in a view that contract visibility and technology progress outweigh freight, overseas capacity, and legal costs.

A buyer today would be backing the idea that First Solar turns its largely U.S. focused backlog and CuRe and perovskite roadmap into sustained, profitable module production despite those cost and policy pressures.

"The main thing that has to go right is that First Solar converts its large U.S. centric backlog and CuRe and perovskite technology roadmap into profitable long term production while managing costs from underutilized overseas capacity, higher domestic freight, and ongoing legal and policy risks."

One Narrative disagrees with today's price. → See where this Narrative says First Solar should trade

Find Your Own Contrarian Opportunity

The next headline does not have to be where your research begins. Go straight to the companies and see whether a contrarian opportunity could be taking shape.

• Company 1 - 39% below our estimate - grows cross-border payment volumes by adding local pay-in and pay-out methods.
• Company 2 - 30% below our estimate - scales coconut-based beverages as private label and export demand reshape the category.
• Company 3 - 32% below our estimate - sells high-end chips and power racks as AI data centres increase energy needs.

That is three of the list. See all 33 potentially undervalued companies →

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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