Goldman Sachs sees upside opportunities in the 2Q26 solar earnings season, with NXT, SHLS and FLNC as top picks

Overview

This is a Goldman Sachs preview of the 2Q26 earnings season for the Americas clean-technology solar sector. The core view is that, although solar-covered stocks have risen approximately 5% over the past three months, underperforming the Russell 2000's approximately 7% gain, and investor sentiment is cautious due to fading momentum and cooling expectations for AI/data-center construction, fundamentals in utility-scale solar and battery storage remain strong. The report believes that, against a backdrop of reduced positioning and sentiment, merely delivering a "clean" quarter may not be enough to drive share prices; companies with upside potential in revenue, bookings, backlog or medium-term estimates are more likely to be re-rated in the near term.

Core views

The report's core views include: first, utility-scale solar and storage demand remains supported by data-center power demand, safe-harbor activity and project pipeline growth; second, industry cost trends declined again in 2Q26, with polysilicon, wafers and cells falling quarter over quarter, while module prices remained relatively resilient; third, residential solar remains mixed, with tighter TPO financing, FEOC uncertainty and installer disruption weighing on demand, but cash/loan products and prepaid leases providing support, while residential storage is outperforming residential PV; fourth, policy remains a two-way variable, as Section 232, FEOC and inverter restrictions could support the domestic supply chain but continue to create near-term uncertainty; fifth, at the company level, NXT, SHLS and FLNC have the most attractive earnings setups, while CSIQ and SEDG have the greatest downside risks relative to consensus.

Analysis framework

The report combines industry-cycle analysis, policy tracking, bookings and backlog analysis, company earnings models and valuation multiples. At the industry level, Goldman Sachs tracks solar-stock performance, days to cover, component value-chain prices, new US utility-scale project pipeline, residential demand and storage trends. At the company level, it forecasts revenue, EBITDA, EPS, gross margin, ASP, costs and shipment volumes for covered companies including FSLR, NXT, ARRY, SHLS, FLNC, ENPH, SEDG, RUN and CSIQ, and compares them with FactSet consensus and management guidance.

Methodology notes

• Industry and company fundamental analysisEarnings preview and consensus divergence analysis

  Compare Goldman Sachs forecasts with FactSet consensus, company guidance and booking trends to identify names that may outperform or underperform expectations.

  The report focuses on comparing revenue, EBITDA, EPS, gross margin, ASP and costs for 2Q26 or the corresponding fiscal quarter, viewing SHLS and NXT as having the greatest upside potential relative to consensus and CSIQ and SEDG as having greater downside risk.

• Demand and bookings analysisBook-to-bill and backlog tracking

  Assess future revenue visibility through changes in bookings, book-to-bill and backlog.

  NXT's bookings have approached or exceeded $1 billion in multiple quarters, SHLS is expected to post a book-to-bill ratio above 1.0x for the seventh consecutive quarter, and another approximately $400 million of bookings for ARRY would support backlog expansion.

• Policy and supply-chain analysisPolicy catalyst and supply-chain localization assessment

  Assess the impact of Section 232, FEOC and inverter import restrictions on prices, bookings, supply chains and demand.

  Policy could raise imported module prices and support the US domestic supply chain, but timing, details and implementation remain uncertain, potentially weighing on near-term bookings discussions and market risk appetite for companies such as FSLR.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• NXT

  Key Buy idea, described by the report as the large-cap name with the greatest potential to continue exceeding expectations and raising guidance.

  Strengths

  Strong bookings and backlog; acquisitions of Prevalon Energy and Zimmermann PV-Steel Group provide medium-term revenue upside, and non-tracker businesses could account for one-third of revenue by 2030.

  Weaknesses

  The valuation multiple was reduced from 33.0x to 27.5x, and the margin impact of certain new businesses and acquisitions requires more detail from Capital Markets Day.

  Comparison

  Relative to other covered companies, NXT is included in the Americas Conviction List and is viewed as the best large-cap setup.

  Risks

  Uncertainty around integration, policy, tariffs, FEOC guidance, international demand and structural margins.

• SHLS

  Key Buy idea; the report believes it may deliver solid 2Q26 results and raise the low end of FY2026 revenue guidance.

  Strengths

  Fast year-over-year revenue growth; bookings may exceed $150mn while maintaining book-to-bill above 1.0x; battery storage, data centers, OEM and CC&I new products offer further expansion opportunities.

  Weaknesses

  Gross margin is down year over year, while litigation and competitive dynamics remain overhangs.

  Comparison

  Goldman Sachs identifies it as one of the better SMID-cap setups, with potential upside greater than that of most peers.

  Risks

  Voltage-related litigation, litigation costs, new-product ramp timing, international expansion and gross-margin recovery.

• FLNC

  Key Buy idea; the report is focused on storage bookings and hyperscaler activity.

  Strengths

  Benefits from battery storage and data-center power demand and may secure its first hyperscaler order while raising its pipeline target.

  Weaknesses

  The market's F3Q26 revenue expectations may be too high, requiring bookings and customer activity to validate growth quality.

  Comparison

  Together with SHLS, it is viewed as one of the better SMID-cap earnings setups.

  Risks

  Timing of booking confirmation, storage-project execution, revenue conversion, margins and volatility in hyperscaler demand.

• FSLR

  Buy-rated covered company, but the report expects a relatively stable quarter.

  Strengths

  The US domestic supply chain, module demand and new technologies such as perovskites and CuRe provide competitive advantages.

  Weaknesses

  The lack of a finalized Section 232 outcome may limit discussion of upside to bookings and ASPs.

  Comparison

  Compared with NXT and SHLS, near-term performance depends more on a policy catalyst than on clear earnings upgrades.

  Risks

  Timing of Section 232, FEOC policy, decisions on idle Southeast Asian capacity, new-technology commissioning and capital allocation.

• ARRY

  Buy-rated covered company with an attractive valuation but limited near-term upside catalysts.

  Strengths

  The utility-scale demand backdrop is positive, and approximately $400mn of bookings would continue to support backlog expansion.

  Weaknesses

  A higher share of international revenue in 2H26 may pressure gross margin, while clear earnings upside catalysts are lacking.

  Comparison

  The report views its valuation as attractive, but its near-term setup is less favorable than those of NXT, SHLS and FLNC.

  Risks

  International-market margins, APA integration, new-product adoption, ASP and gross-margin trajectory.

• SEDG

  Sell-rated covered company; the report is focused on the medium-term outlook and SST progress.

  Strengths

  The long-term SST opportunity could benefit from 800V DC architectures and data-center power-conversion demand.

  Weaknesses

  The current rating is Sell and the target price is below the current price, reflecting Goldman Sachs' caution regarding medium-term execution and valuation.

  Comparison

  It shares inverter- and SST-related opportunities with ENPH, but the report is more cautious on SEDG.

  Risks

  Weak residential demand, SST commercialization timing, intensifying competition, margins and a slower-than-expected demand recovery.

• CSIQ

  Sell-rated covered company; the report expects a weak quarter.

  Strengths

  BESS demand and the Global Energy business remain areas of focus.

  Weaknesses

  The report sees greater downside risk relative to consensus, with a target price below the current price.

  Comparison

  Along with SEDG, it is listed among the names with the greatest downside risk in the coverage universe.

  Risks

  Module prices, capacity expansion, BESS demand, gross margin and global-market competition.

Key data

• Three-month performance of solar-covered stocks+5%Underperformed the Russell 2000's approximately +7% performance.
• Change in days to cover+15%The solar group's days-to-cover short-interest indicator rose moderately over the past month, reflecting volatility and company-specific factors.
• Mid-term annualized US utility-scale solar demand viewApproximately 40GW+Goldman Sachs believes data-center power demand and project advancement support mid-term demand.
• 2Q26 new utility-scale pipeline+10% qoqQuarter-over-quarter growth in new projects reinforces the view that development activity remains constructive.
• NXT F1Q27 forecastRevenue $927mn; adjusted EBITDA $205mn; EPS $1.05Broadly in line with FactSet consensus of $933mn, $206mn and $1.05.
• NXT target price$148Reduced from $168, based on a 27.5x P/E multiple and revised Q5-Q8 EPS.
• SHLS 2Q26 forecastRevenue $157mn; adjusted EBITDA $31mn; EPS $0.12Revenue is close to consensus, while EPS is above the consensus estimate of $0.10; the company may raise the low end of its FY2026 revenue guidance.
• FLNC target price and upside$22; approximately 56% upsideFocus areas include storage bookings, hyperscaler activity and the pipeline target.
• SEDG target price and downside$34; approximately -36%The report maintains its Sell view, focusing on the medium-term outlook and SST progress.
• CSIQ target price and downside$11; approximately -26%The report expects a weak quarter, with attention on capacity expansion and BESS demand.

Impact & implications

For investment implications, the report emphasizes that industry beta remains constrained by policy and sentiment, while alpha opportunities are concentrated in booking, backlog and acquisition-driven estimate upgrades. If NXT, SHLS and FLNC can demonstrate demand, bookings and new-product expansion in their earnings, they may receive stronger re-ratings; FSLR's near-term catalysts depend more on the outcome of Section 232; ARRY's valuation is attractive but it lacks a clear near-term upside catalyst; and SEDG and CSIQ face pressure from medium-term demand, pricing, margins or consensus downgrades.

Risks

• The timing and implementation of the Section 232 polysilicon investigation, final FEOC guidance and potential inverter import restrictions remain uncertain.
• Oversupply across the solar value chain, rising inventories and production restarts may continue to pressure polysilicon, wafer and cell prices.
• Residential solar demand remains affected by tighter TPO financing, installer disruption and policy uncertainty.
• If data-center and hyperscaler-related demand falls short of expectations, support for utility-scale solar and storage bookings will weaken.
• Company-specific risks remain around SHLS litigation, NXT acquisition integration, ARRY international-business margins, FLNC booking confirmation and SEDG/ENPH SST commercialization.

What to watch

• NXT booking and backlog growth, integration of the Prevalon and Zimmermann acquisitions, FY2027 guidance, and new-business revenue and margin targets at Capital Markets Day.
• Whether SHLS raises the low end of FY2026 revenue guidance, as well as orders for battery storage, data centers, OEM and CC&I new products.
• Whether FLNC secures its first hyperscaler order and raises its pipeline target.
• FSLR updates on Section 232, polysilicon policy, ASPs, bookings, new-technology production lines and capital returns.
• Whether ARRY can sustain approximately $400mn of bookings, progress on APA integration, and the impact of international-market mix on gross margin.
• SST pilot deployments, customer feedback, initial orders and the 2028 shipment timetable for ENPH and SEDG.
• Whether residential solar can recover in 3Q26 and 4Q26 after bottoming in 2Q26, and whether residential storage/VPP participation continues to improve.