Nextracker (NXT), a leading provider of solar tracking systems, has rapidly grown in prominence since its public debut on February 8, 2023, when it launched with an initial share price of $24. As of now, its shares trade around $73, reflecting an impressive rise fueled by an evolving solar market that has positively impacted its bookings, profit margins, and overall earnings. However, amidst this tremendous growth, the key question remains: Is Nextracker stock a buy at this juncture?
What Does Nextracker Do?
Nextracker specializes in solar tracking systems that dynamically orient solar panels to follow the sun’s movement. Holding a dominant 26% market share in the solar tracker sector as of 2024, according to Wood Mackenzie, Nextracker has outperformed competitors like Arctech Solar, GameChange Solar, PV Hardware, and Array Technologies.
Solar tracking systems, by aligning panels with the sun’s trajectory, can enhance energy output by 15% to 25% compared to conventional fixed-tilt mountings, making them increasingly attractive in sun-rich regions such as the southwestern United States, India, Latin America, and the Middle East.
Impressive Growth Metrics
Between fiscal 2022 and fiscal 2025, Nextracker exhibited remarkable growth. The company’s revenue escalated at a compound annual growth rate (CAGR) of 27%, surging from $1.46 billion to $2.96 billion. Correspondingly, its adjusted EBITDA increased at an even more robust CAGR of 103%, from $92.3 million to $776.5 million, thus elevating the adjusted EBITDA margin from 6.3% to an impressive 26.2%.
On a GAAP basis, Nextracker experienced a tenfold increase in net income, growing from $50.9 million in fiscal 2022 to $509.2 million in fiscal 2025. This explosive growth trajectory can be attributed to reduced solar module costs, driven by decarbonization initiatives and policy support that incentivizes global solar installations.
Future Growth Potential
Looking to the future, Goldman Sachs forecasts an impressive 57% increase in global solar installations, projecting that output will hit 914 gigawatts (GW) by 2030. Meanwhile, Markets and Markets estimates that the global solar tracker market will grow at a CAGR of 17.3% from 2024 to 2029 as more industries seek to optimize solar efficiency.
To maintain its competitive edge, Nextracker is actively investing in artificial intelligence (AI) and robotics technologies. With existing AI systems analyzing weather data to optimize panel positioning, the acquisition of companies like Onsight Technology (which offers robotic inspection and fire detection services) and Amir Robotics (focused on automated cleaning for large solar installations) signals a strategic expansion into advanced technologies. The company also recently agreed to purchase Origami Solar, a manufacturer of solar panel frames, for $53 million, further consolidating its operational capabilities.
At the end of the first quarter of fiscal 2026, Nextracker reported a substantial backlog of $4.75 billion. For its fiscal 2026 outlook, the company anticipates revenue growth of 8% to 17%, estimating figures between $3.2 billion and $3.45 billion. However, it cautions that its adjusted EBITDA might experience minimal fluctuations, with projections of a slight 3% decline to 4% growth. Factors such as recent acquisitions, increased investment in technology, elevated input costs, and entry into lower-margin international markets could compress margins in the near term.
Valuation and Market Comparisons
Despite the meteoric rise in Nextracker’s stock, it currently trades at a valuation of $9.72 billion, representing approximately 12 times its projected next-year adjusted EBITDA. In contrast, smaller competitor Array trades at a modest valuation of just 5 times next year’s adjusted EBITDA, although its business has contracted over the past two years compared to Nextracker’s expansion.
Given the enterprise value metrics, it is crucial for potential buyers to consider the company’s growth trajectory. While Nextracker’s stock may not replicate the explosive gains observed in the immediate aftermath of its IPO, its continued dominance in solar tracking systems positions it well for future growth as the global solar market expands.
Investment Considerations
Investors pondering whether it’s an opportune time to buy Nextracker stock should reflect upon several factors:
Market Dominance: Nextracker leads the solar tracking systems market with notable momentum, evidenced by its significant market share and robust backlog.
Growth Potential: Current projections from Goldman Sachs and Markets and Markets suggest substantial future demand for solar energy and solar tracking solutions, which should benefit Nextracker.
Technological Innovation: The company’s continued investment in AI and robotics enhances its operational efficiency and competitive position, but also introduces some unpredictability concerning integration costs and timelines.
Valuation Metrics: While Nextracker’s current valuation may seem reasonable relative to industry performance, it is essential to maintain a cautious perspective on future earnings growth, particularly if market expectations are not met.
- Market Conditions: External factors such as fluctuating policies, global economic conditions, and competition will also play a vital role in the company’s performance going forward.
Conclusion
In conclusion, while Nextracker’s ascent in the solar tracker market has been remarkable, prospective investors must weigh its growth potential alongside the inherent risks involved. The company’s strong position, burgeoning backlog, and innovations in technology suggest that Nextracker has a bright future ahead as the global solar market continues to expand. Given its established reputation and market leadership, Nextracker could still represent a worthwhile investment opportunity, provided one approaches with due diligence and a long-term perspective.
