3 Alternative Energy Stocks to Watch Amid Escalated Tariff Uncertainty

America’s booming electric vehicle market, backed by the rapid decarbonization demand of the transport sector, should bode well for alternative energy stocks in the near term. However, enhanced import tariffs imposed by the U.S. government recently, which have only exacerbated the already high cost situation of the industry, might hurt the growth trajectory of these stocks. Despite these challenges, the U.S. Energy Information Administration (“EIA”) has forecasted a 4.5% year-over-year increase in U.S. wind generation in 2025. This growth should play the role of a catalyst for the alternative energy stocks, offsetting some headwinds. Some prominent forerunners in the U.S. alternative energy industry are Bloom Energy BE, Ormat Technologies ORA and Standard Lithium SLI.  

About the Industry

The Zacks Alternative Energy industry can be fundamentally segregated into two sets of companies. While one group is involved in the generation and distribution of alternative energy and electricity from sources like wind, natural gas, biofuel, hydro and geothermal, the other is engaged in the development, design and installation of renewable projects involving these alternative energy sources. The industry also includes a handful of stocks that offer fuel cell energy solutions, which have gained popularity as an affordable clean energy lately. Per the BlooombergNEF’s latest Energy Transition Investment Trends report published in January 2025, global spending on clean energy reached record levels of $2.08 trillion in 2024. With similar or more investments expected in clean energy in the coming years, the industry boasts solid growth opportunities for its participants.

3 Trends Shaping the Future of the Alternative Energy Industry

Wind Energy – A Key Growth Catalyst: Among alternative energy sources, wind energy has been making noticeable progress in the United States. Per the American Clean Power Association’s latest clean power market report, a solid 1,327 megawatts (MW) of land-based wind were installed in the first quarter of 2025. Looking ahead, per the Short-Term Energy Outlook published by the U.S. Energy Information Administration (EIA) in February 2025, wind generation in the United States is projected to increase 4.5% year over year in 2025, with 7.7 GW of wind generation capacity expected to be added to the U.S. grid this year. This reflects a solid growth opportunity for the U.S. wind market at present, which, in turn, should boost the overall expansion of the alternative energy industry.

EV Market Boom to Boost Clean Energy: Electric vehicles (EVs) are playing a pivotal role in the decarbonization of the U.S. transportation sector. The ongoing shift toward electrification, spurred by government subsidies, tax rebates, grants, and incentives such as carpool lane access, is encouraging more Americans to transition from gasoline-powered vehicles to EVs. Falling battery costs are also accelerating the expansion of the EV market. According to the Alliance for Automotive Innovation, 433,843 EVs were sold in the United States in the fourth quarter of 2024, representing a 15% year-over-year increase. Looking ahead, the U.S. EV market is expected to witness a compound annual growth rate (CAGR) of 12.6% between 2025 and 2029 and reach a projected market volume of $154.2 billion by 2029, as per estimates from Statista. This strong growth outlook bodes well for clean energy companies, particularly those that operate extensive EV charging networks across the country.

Rising Raw Material Costs & Tariff Headwinds: The steadily rising cost of raw materials used in renewable installations over the past few years, primarily owing to the shortage of components arising out of the global supply-chain crisis, has already sparked concerns about the energy transition industry’s future among stakeholders. This situation has been further exacerbated by the recent decisions taken by the U.S. government.  Evidently, Donald Trump’s executive order in January 2025, pausing offshore wind leasing and permitting, delivered a fatal blow to the U.S. offshore wind industry.. 

Moreover, the exorbitant import tariff that the Trump administration has imposed lately on America’s trading partners has the potential to jeopardize the nation’s decarbonization plans. President Trump raised steel and aluminum tariffs by 25% in March 2025, ending all country exemptions, in addition to higher tariffs on China. Since America is largely reliant on other nations for the import of these metals used in power grids and renewable projects, such tariff imposition will further put pricing pressure on the nation’s clean power industry. Consequently, in the first quarter of 2025, clean energy projects worth $8 billion were cancelled. While it is too early to predict the extent to which the American clean energy industry will suffer amid such a high-tariff situation, the volatility in the global trade map and the resultant ripple effect might keep the growth trajectory of the alternative energy stocks constricted to some extent in the near term. 

Zacks Industry Rank Reflects Grim Outlook

The Zacks Alternative Energy industry is housed within the broader Zacks Oils-Energy sector. It carries a Zacks Industry Rank #143, which places it in the bottom 42% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates gloomy near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s position in the bottom 50% of the Zacks-ranked industries is due to a negative earnings outlook for the constituent companies in aggregate. 

Looking at the aggregate earnings estimate revisions, it appears that analysts have lost confidence in this group’s earnings growth potential over the past few months. The industry’s bottom-line estimate for the current fiscal year has moved down 0.9% to $2.17 since March 31.

Before we present a few alternative energy stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Beats Sector and S&P 500

The Alternative Energy Industry has outperformed its sector as well as the Zacks S&P 500 composite over the past year. The stocks in this industry have collectively surged 41.9% in the past year against the Oils-Energy sector’s 9.8% decline. The Zacks S&P 500 composite has gained 11.7% in the same time frame.

One-Year Price Performance

Industry's Current Valuation

On the basis of the trailing 12-month EV/EBITDA ratio, which is commonly used for valuing alternative energy stocks, the industry is currently trading at 21.48 compared with the S&P 500’s 16.65 and the sector’s 4.59.

Over the past five years, the industry has traded as high as 21.85X, as low as 8.88X and at the median of 10.43X, as the charts show below.

EV-EBITDA Ratio (TTM)

3 Alternative Energy Stocks to Watch

Ormat Technologies: Based in Reno, NV, the company is primarily engaged in the geothermal energy power business. On May 27, 2025, Ormat Technologies announced a $62 million Hybrid Tax Equity partnership with Morgan Stanley Renewables to support its Lower Rio and Arrowleaf energy storage and solar projects, expected to be operational by the end of 2025. This innovative financing will help Ormat monetize $160 million in tax benefits in 2025, boosting profitability and supporting its long-term energy storage growth strategy. 

The Zacks Consensus Estimate for the company’s 2025 sales implies an improvement of 8.4% from the previous year’s estimated figure. The stock boasts a long-term (three-to-five years) earnings growth rate of 10%. The company currently carries a Zacks Rank #2 (Buy).

Price & Consensus: ORA

Standard Lithium: Based in Vancouver, Canada, Standard Lithium is a technology and lithium development company. Its flagship project is located in southern Arkansas, where it is engaged in the testing and proving of the commercial viability of lithium extraction. On May 29, 2025, it was announced that Smackover Lithium, a joint venture between Standard Lithium and Equinor, has secured AOGC approval for a 2.5% lithium royalty rate for Phase I of its South West Arkansas Project, marking the first such approval in the state. This milestone sets a regulatory precedent and enhances Standard Lithium’s pathway to commercial production by 2028.

The Zacks Consensus Estimate for SLI’s 2025 bottom line is pegged at a loss of 8 cents per share, suggesting a solid improvement from the year-ago quarter’s reported loss of 13 cents. The bottom line beat the consensus estimate in the last reported quarter. SLI currently carries a Zacks Rank #2.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Price & Consensus: SLI

Bloom Energy: Based in San Jose, CA, the company generates and distributes renewable energy. On April 30, 2025, Bloom Energy posted its first-quarter 2025 results. Revenues of $326 million reflected an increase of 38.6% year over year. BE’s gross margin was 27.2%, reflecting a 110 basis points improvement over last year’s reported figure.  

The stock holds a long-term earnings growth rate of 24.4%. The Zacks Consensus Estimate for 2025 sales implies an improvement of 19.3% from the previous year’s reported figure.  The company currently carries a Zacks Rank #3 (Hold).   

Price & Consensus: BE

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This article originally published on Zacks Investment Research (zacks.com).

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