First Solar Sees 50% Rise on Data Boom, Goldman Ups Target to $268

Key Takeaway

• Goldman Sachs projects a 50% upside for First Solar, citing demand from data center growth; price target raised to $268.
• Microsoft commits over $10 billion in renewable energy for data centers, aiming to power 1.8 million homes with 10.5GW capacity.
• Super Micro beats earnings expectations but misses revenue forecasts; JPMorgan sees a 34% stock upside, highlighting AI server market potential.

First Solar's Growth Trajectory

First Solar, a leading solar panel manufacturer, is experiencing a surge in demand, particularly from the data center sector, which is acting as a significant growth catalyst. Goldman Sachs has raised its stock price target for First Solar to $268, indicating a potential 50% upside from its recent close, following another strong quarterly performance. This optimism is echoed by JP Morgan, which raised its price target to $240, citing First Solar's undervalued status and its appeal to U.S. customers seeking domestically produced modules. Despite these positive adjustments, First Solar's shares dipped slightly even after surpassing Wall Street's first-quarter estimates and reaffirming its 2024 sales forecast of $4.4 billion to $4.6 billion. The company reported a net income of $236.6 million, marking a significant increase from the previous year. CEO Mark Widmar highlighted the role of data center load growth in driving demand, with major tech companies like Apple, Google, Meta, and Microsoft committing to carbon-free energy for their data centers.

Microsoft's Renewable Energy Commitment

In a landmark move, Microsoft has committed to investing more than $10 billion in renewable energy capacity to support its data centers, aiming to power 1.8 million homes. This agreement with Brookfield Asset Management aims to bring 10.5 gigawatts of generating capacity online, addressing the surging electricity demand from AI and cloud computing. The initiative is part of Microsoft's broader strategy to meet its clean energy commitments amidst growing concerns over the capacity of power grids to support the increasing demand from data centers. The deal represents a significant step towards sustainable energy for the tech industry, despite challenges such as the intermittent nature of renewable energy and the reliance on natural gas for electricity generation.

Super Micro's Financial Performance

Super Micro Computer reported its fiscal third-quarter results, surpassing earnings expectations but missing revenue forecasts. The company announced adjusted earnings of $6.65 per share, above the anticipated $5.78 per share, but its revenue of $3.85 billion fell short of the expected $3.95 billion. Despite this, Super Micro raised its fiscal 2024 revenue guidance, reflecting optimism about its growth prospects, particularly in the AI server market. Wall Street firms remain bullish on Super Micro, with JPMorgan setting a price target indicating a 34% upside. The company's competitive position in providing Nvidia GPU-equipped servers for AI applications has contributed to its stock growth, underscoring its potential in the evolving tech landscape.

Street Views

• Brian Lee, Goldman Sachs (Bullish on First Solar):

  "As the demand picture continues to improve, management discussed the potential for adding incremental factories, which we view as a key catalyst."

• Mark Strouse, JP Morgan (Bullish on First Solar):

  "First Solar remains undervalued due to its status as the go-to company for U.S. customers seeking domestically produced modules."

Management Quotes

• Mark Widmar, CEO of First Solar:

  "Seeing a meaningful increase in demand expectations driven in part by data center load growth... Apple, Google, Meta, and Microsoft are committed to carbon-free energy as they hyperscale data centers."

• Alexander Bradley, CFO of First Solar:

  "The favored supplier to the projects that are going to be supplying power to these data centers for these kind of asset owners."