Solar Stocks Up 40% YTD as Section 232 Tariff Decision Looms
- The UBS Solar basket (UBXXSOL) is up 40% year-to-date and 33% in May alone, breaking above a well-defined five-year downtrend.
- A potential Section 232 tariff announcement expected in mid-to-late June is the primary catalyst, with First Solar leading the rally near $268.
- UBS flags the residential solar rally in SolarEdge and Enphase as vulnerable to fading, calling Enphase's solid-state transformer announcement non-differentiated.
Solar stocks are showing a clear technical shift, breaking above a well-defined downtrend after more than five years of sustained pressure.
UBS analyst Catherine Gordon is attributing the surge in solar stocks to falling yields and renewed policy momentum. A potential Section 232 tariff announcement in mid-to-late June is adding fuel to the rally, with First Solar leading the charge.
The UBS Solar basket (UBXXSOL) is now up 40% year-to-date.
Gordon provided more context on what's powering UBXXSOL higher:
Clean tech names are outperforming again on Tuesday, with solar leading higher alongside more speculative growth baskets as yields move lower. The backdrop has been broadly supportive, with the UBS Solar basket (UBXXSOL) now up 33% MTD.
First Solar is the standout mover, with the stock trading around $268 and continuing to rally in anticipation of a potential Section 232 tariff announcement in the near term. Earlier today, Windham hosted Toyo Solar on a call, where the company indicated that mid? to late?June could be the timing for Section 232, with measures potentially including a minimum import price alongside tariffs. There is also scope for domestic manufacturing investments to be used as an offset to tariff liability.
The prevailing dynamic has been " buy the rumor and buy the news ," with momentum building into the expected policy update. Beyond S232, the next key catalyst for First Solar (FSLR) is likely to be order commentary on 2Q earnings calls.
Elsewhere, sentiment remains constructive across parts of the solar complex, with Nextracker (NXT) still viewed as a core holding. On the residential side, there have been questions around the sharp moves in SolarEdge (SEDG) and Enphase Energy (ENPH). Enphase's recent announcement around a solid?state transformer appears to have driven a short squeeze. However, this is not viewed as a differentiated development, with multiple electrical equipment players — including Schneider Electric and ABB — already pursuing similar technologies. Against that backdrop, the residential rally looks vulnerable to fading.
Last month, Goldman analyst Brian Lee told clients that " Utility-scale demand remains resilient amid pricing volatility, while residential stays challenged but with cleaner channel conditions . "
