First Solar (FSLR) stock price went parabolic on Wednesday as investors cheered Kamala Harris’ performance on the debate stage. The stock soared by over 15%, its best single-day jump since May when it published encouraging financial results. It soared to a high of $240, 22% higher than its lowest point in August.

Kamala Harris debate performance

First Solar and other solar-related companies surged after the first – and final debate – between Donald Trump and Kamala Harris. SunRun shares jumped by over 12% while Enphase Energy soared by over 5%. 

SolarEdge stock jumped by over 8% while the closely-watched iShares Global Clean Energy ETF (ICLN), which tracks the top companies in the solar and wind industries, rose by over 3%.

This performance is primarily because of the debate, in which most analysts argued that Trump lost to Harris. Data by Polymarket shows that Harris has a 50% chance of winning the election compared to Trump’s 49%. 

The debate was notable because it introduced Harris to most Americans, especially the independent ones. 

Therefore, solar energy stocks jumped because Harris has promoted climate change as one of her top agendas. Trump, on the other hand, has focused most of his attention to fossil fuels. He also criticised solar energy for taking so much desert land. 

The reality, however, is that stocks that are expected to do well during a presidential term rarely do. A good example of this is companies in the clean energy and prison industries.

When Biden came to power, the theory was that clean energy stocks would soar while fossil fuel ones would underperform. Besides, under Biden, the government passed several bills to promote the transition, including the Inflation Reduction Act (IRA). 

However, in reality, companies in the fossil fuel industry have thrived under Biden as US production has surged to over 13 million barrels a day. ExxonMobil’s annual revenue soared from $255 billion in 2019 to over $334 billion in the last financial year. Similarly, Devon Energy’s revenue soared from $6.6 billion in 2019 to over $14.4 billion. 

On the other hand, prison and gun-related stocks were expected to crash during the Biden presidency. In reality, Geo Group stock soared to a multi-year high of $18 earlier this year, up by 264% from its lowest point in 2022. CoreCivic also jumped to a high of $16.5, up sharply from the 2021 low of $5.5. 

Gun manufacturing companies like Vista Outdoor, Ammo, Smith & Wesson Brands, and Sturm, Ruger & Company have also done better than expected under Biden.

Read more: Can Kamala Harris defeat Donald Trump in the 2024 US Presidential elections?

FSLR business is doing well but facing challenges

First Solar,a top US solar panel manufacturer, is doing well even as it faces substantial challenges. 

Like other solar companies, a key challenge is the high interest rate environment, that has led to weaker demand in the US. When Biden came in, the US had zero interest rates, which made installation relatively affordable to most people. 

Interest rates have now surged to a muli-decade high of 5.50% as the Fed worked to slow inflation. This high-rate environment has made solar installation a lower priority for most Americans.

Second, the company has suffered as the trend in ESG has waned in the past few quarters. The most recent data shows that global investors have withdrawn a net of $40 billion from sustainability-focused funds this year. Solar companies formed a key pillar of the ESG movement. 

Third, First Solar is contending with increased supply by Chinese solar panel manufacturers, who have flooded the market. 

As a result, the company’s revenue growth has not been all that strong. Its revenue in the last financial year stood at over $3.3 billion, a small increase from the $3 billion it made in 2018. 

First Solar earnings download

The most recent results showed that First Solar’s revenue for the second quarter rose to $1.01 billion, higher than the $810 million it made in the same quarter last year. Its net income almost doubled to over $349 million. For the year’s first half, the company’s net income rose to over $583 million.

The management hopes that the company will continue doing well. It recently commissioned the expansion work at its Ohio plant while its Alabama facility will start production soon. Its Louisiana facility, with expected capacity of 14.1 GW is expected to come online next year. 

Analysts expect that First Solar’s revenue will be $4.48 billion this year, a 35% increase from last year. Revenues will jump to $5.6 billion next year. 

First Solar stock price analysis

Turning to the weekly chart, we see that the FSLR stock price formed a golden cross pattern in August 2022 as the 50-week and 20-week moving averages crossed each other. It then peaked at $306 in August. 

The stock has remained above the 50-week and 200-week Exponential Moving Averages (EMA), meaning that bulls are now in control. 

It has also jumped above the key resistance point at $231, the upper side of the cup and handle pattern. 

Therefore, the stock will likely continue rising as bulls target the next key resistance point at $300, which is about 25% above the current level. This rally will happen as the Fed starts cutting rates and as the election nears.

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Nvidia’s stock experienced a notable rise of 6% on Wednesday, contributing to a broader market rebound driven by technology shares.

This uptick followed a Consumer Price Index (CPI) report that failed to generate significant enthusiasm for imminent interest rate cuts.

The positive movement in Nvidia’s stock was sparked by CEO Jensen Huang’s presentation at a Goldman Sachs conference in San Francisco earlier in the day.

During the event, Huang discussed Nvidia’s advancements in artificial intelligence (AI) infrastructure and the associated return on investment (ROI) for customers.

Source: TradingView

Nvidia’s role in AI infrastructure

Huang’s conversation with Goldman Sachs CEO David Solomon centred around Nvidia’s role in the evolving landscape of AI and data processing.

Huang addressed concerns about the ROI of Nvidia’s technology, particularly in the context of the slowing efficiency gains from traditional central processing units (CPUs).

Huang pointed out that the deceleration in CPU efficiency, which signals the near end of Moore’s Law, is leading to significantly higher costs for data computations.

In contrast, Nvidia’s graphics processing units (GPUs) offer substantial power and efficiency gains, translating into immediate cost savings for clients.

“You reduce the computing time by about 20 times, and so you get a 10x savings,” Huang explained, comparing the performance of Nvidia’s GPU accelerators to traditional CPUs.

He highlighted that Nvidia’s AI-enabled GPUs are critical in managing the exponential growth of data and reducing operational expenses in data centres.

Read More: Think Nvidia stock is expensive? Just look at Marvell Technology

Cost efficiency and ROI

Although Nvidia’s next-generation GPU racks are priced in the millions, Huang argued that the investment is justified.

He explained that while the initial cost might seem high, it is offset by the significant savings achieved through reduced operational costs and improved efficiency.

“Nvidia server racks look expensive and it could be a couple of million dollars per rack, but it replaces thousands of nodes,” Huang noted.

He further elaborated that the cost of cables and connectivity for traditional computing systems exceeds the expense of Nvidia’s integrated solutions.

In the realm of generative AI, where technologies such as ChatGPT and Claude have gained popularity, Huang asserted that the ROI for Nvidia’s customers is particularly strong.

He cited a substantial return on investment, stating, “For every dollar they spend with us translates to $5 worth of rentals. And that’s happening all over the world and everything is all sold out.”

Impact on productivity

Huang also highlighted the transformative impact of Nvidia’s technology on productivity. He emphasised that the efficiency gains enabled by Nvidia’s GPU systems are revolutionising software development processes.

“The productivity gains are just incredible,” Huang said. “There’s not one software engineer in our company today who doesn’t use cogenerators.”

Huang suggested that the reliance on traditional coding methods is diminishing, replaced by more advanced and efficient techniques enabled by Nvidia’s technology.

The remarks came in a context where Nvidia’s performance is closely linked to broader trends in technology and data processing.

As the industry adjusts to the limitations of traditional CPUs, Nvidia’s role in advancing AI infrastructure continues to gain prominence.

Market response

The uptick in Nvidia’s stock price reflects broader market trends where technology shares are rebounding. This follows a CPI report that did not generate significant expectations for immediate rate cuts, leading investors to reassess their positions.

Nvidia’s strong performance and positive outlook provided a boost to investor confidence, particularly in the tech sector.

Looking ahead

As Nvidia continues to push the boundaries of AI and data processing technology, the company’s focus on ROI and productivity gains will likely remain a key component of its market strategy.

Huang’s presentation at the Goldman Sachs conference reinforced Nvidia’s position as a leader in AI infrastructure, potentially influencing future investment trends and market dynamics.

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Japanese stocks experienced a notable rally on Wednesday, with the Nikkei 225 Stock Average climbing by over 3% as the yen’s recent strengthening trend eased.

This pause in the yen’s upward movement provided a boost to exporters, particularly in the technology and automotive sectors.

The Nikkei 225 surged by as much as 3.5% to 32,810 points by 10:56 a.m. in Tokyo. The broader Topix Index also saw a significant increase, rising by 2.9%.

Hitachi Ltd. was a major contributor to this upward momentum, with its shares gaining 4.7%. This growth was driven by the yen’s decline to 142.95 against the US dollar, which eased the pressure on Japanese exporters.

Source: TradingView

Easing yen concerns boost technology and automaker stocks

The recent strengthening of the yen had been a major concern for Japanese exporters, particularly technology companies and automakers, as it made their products more expensive abroad.

However, with the yen weakening, these sectors saw a rebound.

“The concern over a stronger yen has eased as the market adjusted its expectations for a US rate cut to 25 basis points,” noted Ikuo Mitsui, a fund manager at Aizawa Securities.

Mitsui attributed the market’s positive movement to a recovery in chip-related stocks, which had previously been sold off due to the strong yen.

The rebound in the Japanese market was timely, as the relative strength index for both the Nikkei 225 and Topix Index had been nearing oversold territory, with readings approaching 30.

The Topix Index had been in a downward trend for six consecutive days, marking the longest losing streak in a year.

US inflation data impacts rate cut expectations

The recent pick-up in US inflation for August played a role in altering expectations for future Federal Reserve actions.

The unexpected inflation data reduced the likelihood of a substantial rate cut at the Federal Reserve’s upcoming meeting, affecting market sentiment.

Despite the recent gains, investors remain cautious and are closely monitoring comments from central bank officials.

Bank of Japan policy board member Naoki Tamura indicated that the central bank might need to raise its benchmark rate to at least 1% by the end of the current projection period.

This potential shift in policy could influence future market movements.

Central bank commentary and market outlook

On Wednesday, another Bank of Japan board member, Junko Nakagawa, stated that the central bank would continue to adjust its policy as long as the economy performs in line with projections.

Her comments contributed to a brief strengthening of the yen, underscoring the ongoing volatility in currency markets.

Out of the 2,132 stocks in the Topix Index, 1,955 saw gains, 127 declined, and 50 remained unchanged.

This broad-based advance reflects the overall positive sentiment in the market following the yen’s recent weakening and easing concerns over its impact on Japanese exporters.

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Enphase Energy (ENPH) stock price has moved sideways this year as concerns about the ongoing turnaround continued. The stock was trading at $110 on Wednesday, where it has been in the past few weeks. This price is about 67% below the highest point in 2022, giving it a market cap of over $14.1 billion. 

Potential catalysts for ENPH

Enphase Energy share price has moved sideways as traders focus on three key potential catalysts in the solar energy industry.

The first one is political after the last debate between Kamala Harris and Donald Trump, in which most people believe that she had a better night. In an election that is expected to be relatively close, this debate could tilt the end result. 

Ideally, Harris is seen as a more friendly candidate for the solar energy industry than Trump, who has focused on the fossil fuel industry.

However, as I wrote on the First Solar stock, the president of the US does not have a big impact on how stocks in a certain industry do. In the case of Enphase, its stock price has dropped sharply even with Joe Biden and Kamala Harris being the leaders.

Nonetheless, the stock may see some gains because of the narrative of her winning the election in November.

Second, the company may benefit from the actions by the Federal Reserve, which is expected to start cutting interest rates next week.

Recent data showed that the US inflation dropped to 2.5% in August, the lowest level in over two years. With the unemployment rate stuck above 4.0%, the Fed will likely cut rates by 0.25% next week and two more later this year.

The solar energy industry has gone through a rough patch in the past few years because of higher interest rates in the US and other countries. To deal with the elevated inflation, the Fed hiked rates to 5.50%, the highest level on over two decades. 

Therefore, Enphase and other firms will benefit as rates start falling, making solar power more affordable. In a letter to investors, Badri Kothandaraman, Enphase’s CEO said:

“The solar industry suffered through a period of slowdown in overall demand. This was primarily because of high interest rates in the United States, the NEM 3.0 transition in California, and macroeconomic conditions in Europe.”

Third, Enphase Energy could benefit from the ongoing turnaround efforts by the management and the cost measures it has implemented. In particular, the management has reduced its inventory, which contributed to its slowdown last year.

ENPH financial results

The most recent financial results showed just how Enphase’s business is struggling. Its revenue for the quarter came in at $303 million, down sharply from the $711 million it made in the same quarter in 2023. 

What was notable is that its revenue in the United States jumped by 32% while remaining flat in Europe. It was a different situation in 2023 as Europe was its fastest-growing market. 

Enphase Energy’s margins have also been in a downtrend. Its gross margin was 45.2% in Q2, down from 45.5% in Q2’23. 

Subsequently, the company’s net income narrowed from over $157 million to $10.8 million, showing the challenges that the compay is in.

Analysts expect that Enphase’s revenue for the year will be $1.4 billion, down by 38% from what it made last year. It will then grow to $2.02 billion in 2025. 

These results mean that the company is fairly overvalued, with its $14.9 billion market cap and $14.63 billion enterprise value. Enphase had a net profit of $438 million last year, giving it a trailing P/E multiple of 34, which is quite pricey for a company that is no longer growing. Its forward P/E ratio s 110, higher than that of companies like Nvidia and Microsoft. 

Enphase Energy has a long-term debt of $1.2 billion against $1.6 billion in cash and short-term investments. This makes its balance sheet quite strong.

Enphase Energy stock price analysis

ENPH chart by TradingView

The weekly chart shows that the ENPH share price peaked at $340 in 2022 and then suffered a harsh reversal to the current $110 as it went through substantial challenges. 

The stock formed a death cross in December as the 200-week and 50-week moving averages crossed each other. Since then, the stock has been forming a symmetrical triangle pattern that is shown in green. 

This triangle pattern is part of the bearish pennant pattern, which often leads to more downside, especially now that it is nearing the confluence level.

The stock has remained below the moving averages while the accumulation/distribution indicator has continued falling.

Therefore, at this stage, chances are that the stock will make big moves in the coming weeks. While the move could happen in either direction, chances are that it will have a strong bearish breakout, which could see it drop to $74.9, its lowest swing in November 2023.

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Rivian (RIVN) and Lucid Group (LCID) stock prices have staged a strong comeback in the past few months. Lucid has led this growth, rising by almost 50% in the last three months while Rivian has jumped by almost 20% in the same period. Tesla, the OG of the EV industry, has risen by about 35% in the same period.

EV challenges remain

EV stocks like Rivian, Lucid, and Tesla have risen even as the industry continues going through major challenges.

The key challenge is that the industry is now transitioning from early adopters to the mass market, a difficult place to be. Early adopters tend to be more affluent while the mass market is usually more selective.

The best example of this is data from Cox Automotive, which has shown that the share of US EV transactions that were leases has been in a strong uptrend. These leases have jumped to 32% this year, up from just 9% in 2022. The share of Rivian transactions that are leases is 15.2%, much lower than companies like Tesla, BMW, and Audi. 

The rise in leasing is a sign that many mass mass market customers are afraid of spending substantial sums of money on a new EV. It is also a sign that leases have become significantly cheaper and affordable to most people. 

In a recent article, Bloomberg noted that some dealers were offering leases of as low as $20 for some Nissan Leaf models. 

The other big challenge for Rivian and Lucid is that many Americans are now opting for hybrid vehicles. Companies like Toyota and Ford have become earlier gainers in the hybrid vehicle industry.

The biggest challenge for the two companies, however, is that the Chinese have become really good at building EVs, which explains why the Biden administration has announced plans to place a 100% tariff on vehicles from the country.

These tariffs, at least for now, are just cosmetic since Chinese EV companies are not selling vehicles in the US. Nonetheless, with these companies pumping thousands of vehicles each month, there is a chance that many of them will attempt to enter the US market. 

Depreciation is another big reason why many customers are afraid of buying these EVs. Data shows that a new Lucid vehicle depreciates about 65.6% after five years while its luxury segment’s average is 65.8%. 

Endless money pits?

Meanwhile, Rivian and Lucid Group are still cash incinerators, years after they started shipping their vehicles.

The most recent financial results showed that Rivian delivered 13,790 vehicles in the second quarter and made over $1.15 billion in revenues. It made a negative gross profit of over $412 million and a net loss of over $1.45 billion. By dividing the loss and the units sold, it means that the company lost $83,393 for each vehicle it delivered.

Lucid Group, on the other hand, delivered 2,394 vehicles in the second quarter, bringing in over $200 million in revenue. Its net loss stood at over $643 million or $268k per vehicle. 

These companies have therefore survived because of the recent investments by some of their biggest investors. Lucid Group ended the last quarter with over $4.28 billion in liquidity and a commitment of $1.5 billion from the Public Investment Fund (PIF). 

Rivian, on the other hand, which raised over $11.9 billion when it went public, has also been burning cash. It raised cash in 2023, and most recently, the company secured a $5 billion investment from Volkswagen Group. 

Rivian shareholders have gone through substantial dilution in the past few years. The company’s outstanding shares have risen from over 892 million in 2022 to over 1 billion today. Lucid’s shares have also moved from 1.64 billion to over 2.3 billion. 

Lucid stock price analysis

Lucid Group stock has risen as investors wait for the upcoming Gravity launch. Gravity will be a relatively affordable EV SUV, which will be compatible with Tesla’s chargers. 

Turning to the daily chart, we see that the LCID share price formed a double-top pattern at $4.32. In price action analysis, a double-top pattern is one of the most bearish sign in the market. 

This is a sign that the stock may suffer a harsh reversal in the coming days. This view will become invalid if the stock crosses the double-top level at $4.32 and if it constantly remains above the 50-day and 100-day moving averages.

Rivian stock price analysis

The daily chart shows that the RIVN stock bottomed at $8.25 in May this year and has bounced back to $14. It is consolidating at the 50-day and 100-day moving averages. It has also moved above the ascending trendline that connects the lowest swing since May. 

Therefore, the outlook for the stock is moderately bearish, with the next point to watch being at $10, which is about 30% below the current level. This bearish view will become invalid if the stock rises above $16. 

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