Solar-based exchange-traded funds (ETFs) like Solar Invesco ETF TAN, Proshares S&P Kensho Cleantech ETF CTEX, SPDR Kensho Clean Power ETF CNRG and Global X CleanTech ETF CTEC have been hovering around a 52-week high lately, despite President Trump’s inclination for fossil fuels. Let’s find out what’s behind the rally in solar as well as other clean stocks and ETFs.
AI Boom Benefiting Clean Stocks?
Solar power economics have become much stronger amid the ongoing AI boom. Solar power is cheaper than coal or gas and is becoming increasingly reliable with storage. Costs for photovoltaic panels have fallen sharply over the last decade, while battery storage prices are also falling (per International Renewable Energy Agency), making solar energy a cheaper option.
Solar stocks remain undervalued after years of lagging. Note that TAN ETF lost 32.1% over the past five years against 93.5% gains in the S&P 500. Years of underperformance have made solar stocks a cheaply valued investment option.
With U.S. data centers projected to need about 100-130 GW of continuous power by 2030 (per BCG, as quoted on an Environmental and Energy Study Institute article), solar capacity may need to surge, driving massive investment and making the sector a long-term winner of the AI boom.
Upbeat Earnings
SolarEdge SEDG stock leapt about 29% on Nov. 6, 2025, on Q3 earnings. The company’s results beat on both lines. SEDG announced a partnership with Infineon to developnext-generation solid-state transformers designed to power AI and hyperscale datacenters.
First Solar FSLR, which also saw its shares skyrocket post earnings, is planning its fifth U.S. factory with 3.7 GW capacity addition. The company noted that its products are protected from major trade policy risks and fully comply with foreign entity of concern rules.
Additionally, its modules are expected to qualify for the domestic content bonus, providing an extra 10% tax credit on top of the standard 30% investment tax credit available to solar developers (as quoted on PV Magazine).
Fed Rate Cuts to Benefit Clean Stocks?
The Fed has enacted two rate cuts this year since September. The Fed may cut rates further this year. Lower borrowing costs are a positive for capital-intensive renewable projects. We will probably not see the return of rock-bottom levels of rates seen in the QE era, but the decline in the present levels is also a positive.
During the Fed's QE era, the Federal Funds rate was kept near zero to boost the economy. Then, after raising rates to a high of 5.25%–5.50%, the Fed started cutting rates in September 2024. The current target range for the fed funds rate is 3.75%–4.00%.
Easing Policy Concerns
U.S. President Donald Trump’s "One Big Beautiful Bill" initially created uncertainty for clean energy stocks but the outcome was less severe than feared, providing a much-needed breather to the sector, as mentioned on Investopedia.
Solid Zacks Rank: Time to Buy Solar ETF TAN?
Solar industry comes from the top 30% segment of the 243 Zacks-categorized industries. This Zacks Rank, along with above-mentioned factors, should boost undervalued solar stocks in the coming days.
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First Solar, Inc. (FSLR): Free Stock Analysis Report Invesco Solar ETF (TAN): ETF Research Reports SolarEdge Technologies, Inc. (SEDG): Free Stock Analysis Report SPDR S&P Kensho Clean Power ETF (CNRG): ETF Research Reports Global X CleanTech ETF (CTEC): ETF Research Reports ProShares S&P Kensho Cleantech ETF (CTEX): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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