Wealth managers shed some light on the future of solar stocks now that the OBBA has been enacted.
Will solar stocks have a bright future under President Trump’s One Big Beautiful Act?
Or do wealth managers believe solar and other sustainable equities will get drilled, baby, drilled by investors in favor of fossil fuel plays?
A quick check of the Invesco Solar ETF (Ticker: TAN) shows that solar stocks have shined thus far in 2025, returning 12% compared to the S&P 500’s 8.5% gain. Roll that back a little, however, and the solar sector’s returns greatly dim. The TAN has lost over 8% in the past 12 months and more than 16% in the past 5 years, while the S&P 500 is up 17% and 96% respectively over those time periods.
And now that President Trump has started enacting his agenda including the passage of his One Big Beautiful Act, the conventional wisdom on Wall Street is that the atmosphere for sustainable stocks, and especially solar, could appreciably darken.
Not necessarily, said Eli Horton, managing director at TCW.
“Second-term Trump policies are far more expansive and supportive of growth in energy production and electric power than anything we have seen in some time, including Trump’s first term. While new policies are less supportive of solar and wind specifically, they also remove many constraints on energy growth that previously existed in pursuit of net zero carbon emissions,” Horton said.
In the near-term, Horton believes capital will still flow to solar due to continued incentives through the tax credit sunset period, competitive unsubsidized economics, and time-to-market advantages. In addition, innovation, investment, and policy support for large scale battery technology and materials are complementary to intermittent electricity sources such as solar, according to Horton.
In the medium-term, he said the relaxation of carbon capture restraints and deregulation will open opportunities to invest in natural gas infrastructure and power generation.
“Longer-term, incentives and policies to stimulate and innovate nuclear technology will provide an engine for electrical energy production growth not seen in a developed economy in generations,” Horton said.
Meanwhile, Max Jackson, managing director at Ballast Rock Asset Management, is bullish on energy in the US – no matter where it comes from – given the expected surge in demand from data centers, increased use of AI, robotics, reshoring of some manufacturing industries, electronification of the vehicle fleet and industrial processes as well as, to a lesser extent, advances in cryptocurrency and blockchain technology.
“Recent changes to the budget have shifted federal support away from renewable sources like wind and solar towards alternative sources like nuclear. But, even without subsidies, solar is one of the cheapest, safest and easiest ways to get additional capacity onto the grid,” Jackson said.
He also emphasized that solar has the shortest development timelines and is at the front of all the utility interconnect queues, making it the only viable short-term energy supply option. According to Jackson’s timeline, most, if not all, of the other energy sources the current administration is focusing on to meet the energy demand will take multiple years longer than renewables to bring online.
“This creates a classic supply/demand imbalance, which points to increasing energy prices in the near-term and means there are going to be opportunities for sure. We think certain parts of the solar market, particularly community solar, are especially attractive,” Jackson said.
Not all wealth managers believe solar stocks will continue to shine in the less-than-environmentally-friendly political environment, however.
Becky Lightman, founder of Lightman Capital, for example, is sticking with Wall Street’s widespread belief that solar stocks should be avoided for the foreseeable future. In her opinion, solar is highly inefficient, deeply reliant on government subsidies, and riddled with supply chain and geopolitical challenges. Anecdotally, she said she is seeing solar companies backing out of their purchase commitments.
“Think of the challenges: their tax incentives will sunset at the end of this year. Also, solar projects require significant upfront capital investment, and the industry is highly sensitive to interest rates. As we saw in 2022-2023, even high-quality names in the solar space sold off sharply during tightening cycles. Add to this the geopolitical overlay — U.S.-China trade tensions, anti-dumping investigations, and forced labor concerns around Xinjiang — and you have significant uncertainty in component availability and cost structure,” Lightman said.
