Solar Stocks Surge Ahead of Election: What’s Driving the Rally?
Shares of solar energy companies soared on Monday, just one day before the U.S. presidential election. While electoral speculation played a role in this surge, there are additional factors to consider.
Shares of Sunnova Energy (NYSE: NOVA) increased by as much as 15%. Array Technologies (NASDAQ: ARRY) saw a rise of 15.4%, while Sunrun (NASDAQ: RUN) climbed 10.7%. By 3 p.m. ET, these stocks reported gains of 11.3%, 14.2%, and 8.6%, respectively.
Market Reaction to Election Speculation
As the election approaches, investors are adjusting their portfolios based on potential outcomes. A closer race has led some to believe that solar energy stocks may become highly sought after if a Harris administration takes charge.
However, considering the past four years, many solar stocks have performed poorly, with some even going bankrupt. Previous elections have shown that speculation around government incentives can lead to outcomes that often contradict short-term expectations. For instance, between 2016 and 2020, coal stocks struggled dramatically, while solar companies like Sunnova, Array, and Sunrun lagged behind the market following the last election.
Relevant Tech Developments to Note
Investors should focus on recent news involving major tech companies like Meta Platforms (NASDAQ: META) and Amazon (NASDAQ: AMZN), both facing delays with nuclear energy projects. Meta intended to build an AI data center adjacent to a nuclear facility, but regulatory concerns arose, including the discovery of rare bees at the site.
Similarly, Amazon’s attempt to secure power from a nuclear plant was blocked due to potential additional burdens on current customers.
The challenges in constructing nuclear power plants, combined with rising demand for data center energy, highlight solar energy’s potential as a supplementary solution. Place solar energy with energy storage in a well-suited location, and it could alleviate some of these challenges. This prospect has fueled interest in solar stocks.
Interestingly, although Sunnova and Sunrun focus on rooftop installations, there’s talk that Sunrun is negotiating to establish power plants for data centers, with Sunnova potentially eyeing similar rooftop initiatives. Among these companies, Array Technologies could be the biggest winner, as they manufacture mounts for large-scale utility projects, ideal for data centers.
Challenges on the Horizon
Investing based on election outcomes can often mislead investors, as results sometimes yield contrary effects. However, the needs of tech companies for reliable energy will remain a key factor. Even if nuclear energy developments progress, meaningful contributions to the energy landscape may not emerge until around 2030. In the meantime, solar energy could play a crucial role in supporting rising energy demands, potentially benefiting solar stocks in the long run.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, serves on The Motley Fool’s board of directors. Randi Zuckerberg, a previous market development director for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is also part of The Motley Fool’s board. Travis Hoium has no holdings in the stocks discussed. The Motley Fool holds positions in and recommends Amazon and Meta Platforms. A disclosure policy is in place for The Motley Fool.
The views expressed in this article are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
