Solar stocks are finally seeing brighter skies. After spending much of the past two years under a cloud of higher interest rates, policy uncertainty, and industry oversupply, the crisis in the Middle East has renewed the focus on energy independence and propelled these stocks to be some of the best performers in the market as of recent. This rally may be about a bigger story, too – solar is eclipsing impressive electricity generation benchmarks, and demand is growing.
Shares of major solar companies have led the market higher since the most recent Middle East conflict began. Since February 28th, 2026, the solar industry – as proxied by TAN – is up about +14.5%. The industry has outperformed the overall market, which is up about +7.5% over the same timeframe, as shown below. Investors this earnings season heard from solar companies that demand is growing for solar generation capabilities, with First Solar CEO Mark Widmar noting, “We delivered record first quarter revenue, and record sales in India. There’s still a lot of momentum, a lot of activity going on.”1
Solar Overtakes Coal
The rally in solar stocks comes at a time when the underlying demand for solar power is hitting milestones. For the first month ever, solar generated more electricity than coal in the United States during May 2026, according to Ember.2 As shown in the chart below, solar supplied 12.8% of U.S. electricity generation, surpassing coal’s 12.2% share and becoming the nation’s third-largest source of electricity behind only natural gas and nuclear power. U.S. solar generation reached a record 45.5 terawatt-hours during the month, up 17% from a year earlier. This milestone is more than a symbolic victory. It highlights the speed at which solar power is becoming a foundational component of the global electricity system. Just five years ago, solar represented only 5.4% of U.S. electricity generation, while coal accounted for nearly 20%.
A Global Story
Solar’s bullish backdrop extends far beyond the United States. According to data analyzed by Ember, Chinese solar exports reached a record 68 gigawatts in March 2026, doubling from the prior month and surpassing the previous all-time high by nearly 50%.3 The scale of those exports is remarkable – it’s a level that is equivalent to Spain’s entire installed solar capacity. Demand surged across Asia, Africa, Europe, Australia, and other regions as countries sought affordable, domestically generated energy amid elevated fossil fuel prices and geopolitical uncertainty. More than 50 countries set all-time records for Chinese solar imports during the month.
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The robust global demand for solar power may suggest that the recent rebound in solar stocks may represent more than a short-term, geopolitical-driven rally. While volatility will undoubtedly remain, the industry’s long-term demand drivers appear stronger than ever. Record global solar deployments, accelerating electricity demand, and solar’s growing role in the power mix suggest the sector’s fundamentals are finally beginning to shine through. For solar investors, the forecast may be calling for sunny days ahead.
- https://finance.yahoo.com/quote/FSLR/earnings/FSLR-Q1-2026-earnings_call-566815.html
- https://ember-energy.org/latest-updates/solar-overtakes-coal-in-us-electricity-for-the-first-month-on-record/
- https://ember-energy.org/latest-updates/chinese-solar-exports-double-in-a-month-to-hit-record-high-amid-energy-crisis/
For more content by Blake Anderson, CFA®, Director, Portfolio Management, click here.
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