US Tax Credits Boost First Solar Gross Margins to 41%

Key Facts

1First Solar's gross margins rose from 18.49% to 41.33% primarily due to Section 45x tax credits.

2The company has high geographic concentration with 96% of its revenue generated from the US market.

Amid a strategic US push to bolster domestic renewable energy manufacturing, First Solar has seen a dramatic shift in its profitability due to government fiscal incentives. According to reports, the company's gross margins surged from 18.49% to 41.33%, a growth primarily attributed to Section 45x tax credits. However, the data reveals a significant geographic concentration risk, with the company generating 96% of its total revenue within the US market.

This robust performance comes as global solar firms grapple with oversupply pressures, where domestic tariffs have helped First Solar maintain its pricing power. In comparison to peers, Enphase Energy (ENPH) recently reported gross margins of approximately 40.3% for Q1 2024 per market data, placing First Solar in a strong competitive position due to legislative support. Analysts warn, however, that these credits are scheduled to phase out starting in 2030, potentially impacting long-term profitability.

Investors should watch FSLR price levels, which stood at $271.80 at close on June 5, 2026. Traders are looking ahead to the US ISM Manufacturing PMI due today (June 1, 2026, per the economic calendar) to gauge industrial sector health. Additionally, Fed Chair Powell’s speech on May 31, 2026, remains a key catalyst for interest rate direction, which directly impacts financing costs for large-scale solar projects.