First Solar Must Prove Bookings Can Halt Backlog Slide As Stock Nears Lows

First Solar enters its third-quarter report with a striking disconnect. Last quarter, management delivered its strongest profitability of the year, sounded more confident about demand and pointed to hyperscaler data-center projects as a fresh growth driver. Since then, the stock has fallen 18% while the S&P 500 gained about 3%. When the company reports after the close on October 29, the question is whether the operating story still holds or whether the market has correctly sensed trouble the income statement has not yet shown.

The Street expects earnings of $4.64 a share on revenue of $1.31 billion. That would be roughly 9% EPS growth from a year ago against an almost 18% drop in sales, so profits are expected to grow even as volumes shrink. That kind of result depends on pricing, manufacturing tax credit mix and cost control, not volume. The Earnings Whisper sits at $4.55, modestly below consensus, which suggests the informed bar is slightly lower than the published number. Revenue should rise meaningfully from the prior quarter's $1.06 billion, and management's reaffirmed full-year range of $4.9 billion to $5.2 billion leaves consensus of $5.10 billion in the upper half. That is achievable, but it leaves little cushion if shipments or recognition timing slip.

Margins are the first test. Gross margin jumped to roughly 57% last quarter from 47% in the first quarter, but about $89 million of that came from a net tariff benefit that should not be treated as recurring. Management's adjusted EBITDA guide of $625 million to $775 million brackets the prior $644 million, implying strength can persist. Investors should look for underlying margin quality as Section 301 tariffs, higher aluminum, steel, copper and electricity costs, and rising domestic freight start to bite in the second half. Results near the top of the EBITDA range would validate the inflection. Landing near the bottom would suggest the second-quarter spike was more one-time than structural.

Backlog is the bigger issue. Contracted backlog has fallen four straight times, from 54.5 GW a year ago to 45.1 GW. Management frames this as deliberate selectivity while policy is unsettled, and it backed that up with about 1.9 GW of U.S. bookings at roughly 36 cents per watt, more than 2 GW under conditions precedent and another 2 GW it considered highly likely to close by year-end. This quarter should show whether those deals actually convert. Stable or rising backlog with pricing holding in the mid-30-cent range would go a long way toward answering the bears. Another decline, or bookings at weaker prices, would undercut the more confident tone. Updates on CURE price adjusters reaching customers and on hyperscaler-linked projects such as Steel River would add support.

Policy remains the wild card. A Section 232 polysilicon decision that management expected around August or September would determine whether roughly 1.8 GW of idled Malaysia and Vietnam capacity restarts, a drag of about $30 million per quarter. Any clarity, or further delay, will shape the 2027 conversation.

Sentiment has softened from clearly bearish to only mildly negative heading into the print, yet the shares trade well below the 200-day moving average of about $219 and only about 3% above the post-earnings low of $168.60. That positioning lowers the bar somewhat, but it also signals deep skepticism. In the end, the report will be judged less on whether First Solar clears an EPS target than on whether bookings finally outpace shipments. If the backlog stabilizes while margins hold, the recent selloff looks overdone. If it keeps shrinking, the profitability gains may look like a peak rather than a foundation.

This earnings preview was originally published on Earnings Whispers.

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