Nextracker (NXT): The Only Solar Stock Worth Watching?

While most investors have been chasing semiconductors and cloud infrastructure, one of the most direct beneficiaries of the AI revolution may not be in Silicon Valley at all … but in the solar fields powering it.

Nextracker (NASDAQ: NXT) is A rated according to our Zen Ratings system. And it’s not only the world’s leading solar tracker company … but also arguably the most AI-leveraged solar stock in the U.S. market.

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Here’s why.

I haven’t written about solar in a while, but the Invesco Solar ETF (NYSEARCA: TAN) is quietly up 34% this year and looks like it’s trying to break out for another run higher:

Not Just Solar … Smart Solar

Nextracker builds the systems that let solar panels move with the sun.

Its patented tracking technology and software suite (like TrueCapture and NX Navigator) continuously adjust panels in real time using machine learning, weather data, and terrain analysis.

The result: up to 6% more energy output from the same panels: a huge edge for the massive utility-scale solar farms now being built to power AI data centers and the wider electrification wave.

This is what makes Nextracker different from traditional solar hardware plays like First Solar (NASDAQ: FSLR) or Array (NASDAQ: ARRY). It’s a tech-enabled platform, not just a manufacturer.

World Leader With a Defensible Moat

Nextracker controls roughly 23% of the global solar tracker market, holding the No. 1 spot for nine straight years.

Its dominance comes from two things:

1. Scale: it has the partnerships, supply chain, and data advantage smaller players can’t match.
2. Stickiness: once utilities or EPCs integrate Nextracker’s system, they rarely switch.

That combination gives it recurring software revenue, expanding margins, and a feedback loop that makes its tech smarter with every installation.

A Fortress Balance Sheet in a Fragile Sector

Most solar companies are struggling under debt and rate pressure.

But NXT is sitting on $700 million in cash, only $145 million in debt, and generated $427 million in free cash flow last year … about 90% conversion from EBITDA.

With 21% EBITDA margins and negative net debt, it’s the rare solar stock that can self-fund growth without dilution or risky financing.

Even if the solar cycle softens, NXT can keep investing while peers retreat.

AI, Electrification, and Energy Security = Demand

AI data centers are becoming power-hungry cities of their own, and solar is emerging as the cheapest and fastest-growing energy source to feed them.

Policy tailwinds like the Inflation Reduction Act (with a 30% investment tax credit and U.S.-made bonuses) are accelerating that trend, locking in years of deployment growth.

Nextracker sits at the center of that buildout … not on hype, but on hardware and data.

Valuation: A Classic Mispricing?

At a forward PE of 19, NXT is arguably still priced like a cyclical industrial, not a company with software margins, dominant market share, and net cash.

That’s why it’s scoring a B right now in our Value Component Grade, which also weighs earnings before interest and taxes/enterprise value, cash flow yield, free cash flow to price, and other metrics.

To see other strong value stocks right now, check out our Zen Strategies value portfolio, which is focused on 21 unique measures of value, and pinpoints underappreciated stocks that are ready to rise. 

There is one caveat with NXT: its AI Component Grade is currently scoring a D. Conservative traders/investors may want to see that improve (and/or for the Solar ETF I showed above to confirm its breakout) before dipping their toes in. 

See NXT’s full Component Grade breakdown.

My Final Take

Nextracker is one of the clean energy plays most-levered to the future AI and data center buildout.

It’s a sticky, data-driven business, but still valued like a hardware maker. I want to see what happens when the company is repriced for its true potential.

You can add NXT to your watchlist here. 

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