Quick Read
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First Solar and Sunrun each jumped roughly 9% Wednesday, but Sunrun remains down 49% and First Solar down 22% for the year.
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Iren fell 9% and CoreWeave dropped 8% after Texas elected a governor who campaigned on halting new data center approvals.
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Barclays analysts said the Democratic outcome 'potentially reduces the risk of further political interference with renewable energy incentives.'
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On Wednesday morning, the day after Democrats won control of both houses of Congress, clean-energy stocks rose and AI data center stocks fell. As of 10:46 AM ET, First Solar( NASDAQ:FSLR ) was up 9.26% at $203.12 and Sunrun( NASDAQ:RUN ) was up 7.66% at $9.35. Enphase Energy( NASDAQ:ENPH ) had gained 9.75% as of about 10:40 AM ET. Over the same stretch, Iren( NASDAQ:IREN ) fell 9.34% and CoreWeave( NASDAQ:CRWV ) dropped 7.54%.
Anna Wu, investment strategist and founder of Floodlines Research, gave the move a name, per Bloomberg: "The blue trade is showing up already with money rotating out of the AI buildout and into what a Democratic Congress favors." What investors are doing is preparing ahead of any policy change. Every tax credit and tariff that applied on Tuesday still applies today.
Solar Stocks Are Bouncing From Deep Losses
Per Bloomberg, First Solar rose as much as 9.2% in premarket trading and Sunrun as much as 9.4%. Even with Wednesday's gains, First Solar is still down 22.24% for the year and Sunrun is down 49.18%. Yahoo Finance reports that Mizuho raised its First Solar price target to $328 from $324, and that the stock had been trading well below its one-year high of $320.95.
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Both companies depend heavily on Washington. First Solar's third-quarter diluted EPS of $5.30 beat the $4.64 consensus. Its full-year gross profit guidance, however, assumes $2.07B to $2.19B in Section 45X manufacturing credits. Sunrun's exposure comes through financing. The company relies on tax equity and sales of tax credits, and it cut its 2026 cash generation outlook to $200M to $375M, partly because capital costs rose.
Renewables Rally From Copenhagen to Seoul
Renewable stocks rallied worldwide on the result, "an outcome seen as supporting more favorable policy for the industry." Per Bloomberg, Orsted rose as much as 8.1%, the biggest gain in Europe, and Vestas and SMA Solar also moved higher. In Asia, Bloomberg said HD Hyundai Energy Solutions jumped 12% and OCI Holdings 10%. Wu said Hanwha Solutions "benefits directly if a Democratic Congress pushes back on Trump's anti-solar policy" because its Qcells unit runs large U.S. factories.
Barclays analysts led by Peter Crampton wrote that the result "potentially reduces the risk of further political interference with renewable energy incentives and provides greater protection for the long-term economics of US wind, solar and battery storage investments."
Data Center Selling Picked Up After the Open
At 9:43 AM ET, CoreWeave was down 3.75% and Iren 4.64%. Both declines widened as the morning went on. Texas holds a large share of planned U.S. data center capacity, and it elected a governor who campaigned on stopping approvals for new facilities. So far that is a campaign promise. No law supports it yet. Bloomberg says renewables are also gaining as money shifts out of AI-related stocks (the power, cooling and networking suppliers behind that expansion are the ones we pulled into a free report on seven AI infrastructure names that aren't chipmakers).
Reasons the Rotation Could Fade
Per Reuters, analysts doubt any legislation could do much to slow data center construction. Yahoo Finance noted that "Any new legislation would still need to pass through the legislative process and could face a presidential veto." Invesco's Paul Jackson told Reuters that the case for solar does not depend only on who controls Congress: "The more that oil and gas prices rise, the bigger the incentive, the bigger the economic incentive to roll out clean energy."
Signals That Will Show Whether the Trade Holds
First, see whether the rotation lasts through the close and past day one. Second, follow how CoreWeave and Iren trade as the Texas plans take shape. Third, look at what the new Congress actually takes up. JPMorgan strategists said ahead of the vote that a "blue wave" would help clean-energy stocks through spending, oversight and permitting. Any of these could keep the trade going or reverse it. Until bills move, the solar gains reflect expectations about policy.
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