This “Convergence Trigger” stock is still in the early stages of building AI power.
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Tom Young is here with your Sunday digest.
Last week we talked here about how to become a master trader Jonathan Rose And the Wall Street veteran Mark Chaikin They combined their smart money indicators into a “convergence stimulus” signal.
They’ve revealed their top five picks for their system at Peak convergence Thursday night. I hope you have followed it. The selection I showed here on Sunday digest From that list –Ameresco Company (I command you) – He has actually It has risen 10% since then, bringing its one-month return to 18%. In fact, the five companies chosen by Jonathan and Mark are now up 38% since the beginning of May.
Now, it’s tempting to think it’s too late to jump in. Jonathan and Mark’s five stocks are all part of the AI revolution, and many investors are rightly wondering how high things will continue. The big three manufacturers of DRAM chips – Micron, Samsung, and SK Hynix – are now each worth $1 trillion.
Could it be worth $2 trillion? $5 trillion? Or more?
Fortunately, I’m confident that at least one of the Convergence Catalyst companies still has more upside. I’ll tell you why in this update.
In the meantime, check it out Listen to Jonathan and Mark’s replay Peak convergence If you haven’t seen it yet. They explain how their system works, and how you can use it to make sure you don’t miss the next investment boom. (And don’t wait too long… the publisher will remove the video later this week.)
Now, here’s more on this “Convergence Catalyst” stock that I think still has some juice in it…
Sunny outlier
First Solar Company (FSLR) It’s a pretty cool company. This solar company, based in Tempe, Arizona, doesn’t just have one moat around its business…it has four. Let’s go through each of them.
1. Product. First Solar is the only company in the world that can produce cadmium telluride (CdTe) photovoltaics on a large scale. Unlike crystalline silicon (c-Si), CdTe versions are easy to build and highly resistant to heat and long-term degradation. This makes it superior in hot and humid environments such as the southern United States, India, and the Middle East.
This moat is protected by numerous patents, $2 billion in cumulative R&D spending, and a proprietary manufacturing process that even General Electric (General Electric) Can’t find out. GE exited the CdTe business in 2013.
2. Supply chain. First Solar is also protected by a strange feature in its technology. CdTe panels do not require any polysilicon, silver paste or foil. Instead, their panels are made primarily of glass, steel, and a thin layer of a special cadmium telluride compound.
This is especially important because China is so firmly in control 80% From the global supply of c-Si board components. Competitors like Canadian Solar Inc.CSIQ) are low-margin businesses because they rely on Chinese suppliers who can dictate terms and prices. First Solar faces none of these challenges.
In addition, First Solar is vertically integrated. It controls its tellurium sourcing, module assembly, and even end-of-life recycling to handle and reuse the cadmium in its panels. Each step is relatively difficult, for example, telluride is as geologically rare as gold, and cadmium can be as dangerous as mercury. Bringing the entire series under one roof makes this moat particularly wide.
3. Government subsidies. The US solar industry is currently protected by two pieces of legislation confirmed by one big, beautiful bill of 2025:
- Article 45X. This series of production-based tax credits greatly benefits First Solar because the credits for cell production and assembly are cumulative. In fact, the company generated so many of these credits that it sold $1.3 billion worth of them in 2025, accounting for a quarter of total revenue.
- FEOC Restrictions. this consumerThe existing tax credit requires buyers to avoid Foreign Entity of Concern (FEOC) plate makers to claim their own credits. First Solar overcomes this hurdle easily thanks to its local CdTe supply chain. These rules continue through 2027 for project-level credits and through 2032 for manufacturing credits.
I expect they will be extended in some way. In April 2026, a group of Republican congressmen from Pennsylvania, New York and Ohio proposed legislation to preserve commercial solar tax credits to protect companies like First Solar, which has a large presence in the region. Meanwhile, FEOC rules have been strengthened under the current administration, and any trade war with China would likely lead to expansion. Although the White House has publicly criticized the solar industry, its actions have moved in the other direction.
4. Financial strength. I don’t usually give a “moat” to financial power, as anyone with a large enough portfolio can step in. But I’ll make an exception for the solar industry because everyone is in a terrible situation. Canadian solar energy company, Jinko Solar Holdings Inc. (jx), Sunrun Company (Being) Its debt-to-equity ratio is over 250% and is struggling to afford interest payments. LONGi Green Energy Technology Co., Ltd. lost Ltd. China has been making money since 2024 and is likely to continue doing so until at least 2027. Making c-Si panels is hard work.
Meanwhile, First Solar has maintained its strong balance sheet, thanks to its 30% margins on its diversified product. The company has net cash of $2 billion on its books, almost no debt, and is expected to generate $1.8 billion in free cash flow next fiscal year, up from $1.2 billion in 2025.
This financial strength has allowed First Solar to continue investing in research and development ($270 million this year) and spending on production capacity ($884 million). It outperforms its competitors by about 3 to 1 on R&D and could be the company that brings next-generation technologies like perovskites to market. (Calcium, titanium and oxygen crystals would be a huge step forward if they could be scaled up.)
Dawn request
These moats suggest First Solar still has room to run. Shares are up just 11% this year, even as demand for electricity from AI data centers continues to rise.
Consider the mathematics. Nvidia Corp’s latest Blackwell chipset. (NVDA) It consumes nearly four times the energy of the previous generation and produces much more heat. Multiply that across thousands of racks, and you begin to understand why data center operators are scrambling for chip power generation and cooling capacity.
So where will this juice come from?
Data center operators are increasingly turning to the sun. The solar production curve roughly matches data center cooling demand, solar farms are quick to build, and solar couples well with electricity generated from natural gas and batteries. The US Energy Information Administration estimates that 51% of planned additions to grid capacity in 2026 will be from solar energy.
First Solar also passes Jonathan and Mark’s smart money screens with ease. Stocks recently flipped to “very bullish” in the MARC system due to strong smart money buying. As you can see from the chart below, his system has consistently found the best times to buy.
Mark Chaikin First Solar Company (FSLR) Evaluation
I also believe there is more room for growth for First Solar. Only 17% of panels installed in the United States currently are CdTe, and about 2% of global capacity uses this technology. This gives the company a long runway for growth. Last quarter, First Solar reported record sales in India, and said its backlog now stands at 47.9 gigawatts, or more than 2.5 years of revenue.
Beam of caution
There are clearly long-term risks for a company like First Solar:
- Organizational. First Solar faces an earnings cliff in 2027 when the subsidies start to expire. Without any changes, one of its largest moats could dry up by 2032, taking up to a third of revenue with it.
- Definitions. Import taxes on Southeast Asian c-Si imports could be reduced, eroding the company’s pricing power.
- Future products.First Solar’s success with perovskites is not guaranteed. Although these crystals have shown efficiency rates of up to 34% (compared to 26% for c-Si), this has only been demonstrated on small scales. LONGi Green Energy is also pursuing this technology
However, markets have priced these concerns in further. First Solar shares trade at just 11 times forward earnings, or roughly a third of similar companies in the AI energy builder. If regulations move the way I expect, stocks will be up at least 50% from here.
Swiss cheese model part two
As I wrote here last week, the markets have a lot of pressure building under the surface. Many retail investors are now chasing the returns of hottest stocks, and analysts at Morningstar (and many others) warn that companies like Micron Technology Inc.in) The wave must be “expected to collapse in the long term.” Morningstar analysts give Micron a fair value of $455, which represents a 50% decline.
Fortunately, Jonathan and Mark’s “Convergence Incentive” system helps investors avoid these pitfalls by forcing investment ideas across multiple screens. Even if the smart money is giving bullish signals to Micron stock, options traders may have very different expectations.
So, check it out Watch them Peak convergencewhere Jonathan and Mark will explain where they see pockets of opportunity next, and how they are navigating this “new normal” of markets that rise quickly and fall just as quickly.
Until next week,
Thomas Young, CFA
market analyst,Investor location
