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KIT NORTON

The Stock Market Thought Solar Was Dead Under Trump But This Is Why Stocks Are Roaring Back

The stock market believed that President Donald Trump's "Big Beautiful" budget was a death knell for solar, with its cuts to clean energy and doubling down on fossil fuels. However, solar stocks are not dead and the sector broadly advanced Friday as the Treasury department issued guidance for clean energy projects to receive federal tax incentives.

On Monday, Sunrun and NextTracker roared higher after upgrades, to outperform and buy, respectively. Sunrun added 11.4%, NextTracker climbed 11.8%, during Monday's stock market.

On Friday, the 27 stocks in the IBD-tracked Energy-Solar industry group collectively jumped 11.6%. Leading the charge, Sunrun galloped 32.8% higher on Friday' stock market trade, while and SolarEdge Technologies advanced slightly more than 17%.

Meanwhile, Nextracker jumped 12.2% and First Solar angled 11% higher Friday.

The advance of solar stocks late last week followed Friday's Department of the Treasury release which made clear that wind and solar projects can qualify for federal tax credits if they have either begun "physical work" or a 5% investment in projects by July 2026.

Investors can also keep tabs on the Leaderboard, the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list.

Guidance A Positive For Solar

Analysts responded positively to the Trump administration's guidance.

On Friday, GLJ Research upgraded Sunrun to hold from sell and put the firm's 2025 year-end price target under review. The firm proclaimed that the Treasury's guidance "couldn't be better news for the residential solar space."

The analysts noted that the stock market broadly believed that the Treasury department was going to make it impossible for residential solar companies to take advantage of the Biden-era tax credits in years to come, but that the Trump administration "did the opposite."

GLJ Research said that as long as residential solar installers can prove "continuous work" they will qualify for the tax credit, which it called "a very low hurdle."

Jump-Start Your Investing Skills With IBD Digital

On Monday, RBC Capital also upgraded Sunrun to outperform from sector perform, hiking its price target to 16, up from 12. The analysts wrote that RUN shares deserve a higher multiple as the Treasury guidance clarification provides greater certainty on its longer term opportunity.

Meanwhile, Guggenheim analysts on Monday upgraded Nextracker to buy from neutral with a 74 price target, with the Trump administration's guidance good news for tracker suppliers."

Guggenheim wrote that of all the clean energy subsectors impacted by Friday's guidance, solar tracker companies are "positioned to benefit the most."

Please follow Kit Norton on X @KitNorton for more coverage.

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