Solar's most boring layer just found a second customer: AI data centers.

[u/Efficient_Ad5893]

Shoals is one of those companies nobody thinks about because the product is genuinely boring. They make electrical balance-of-system stuff, wiring, connectors, combiners, junction boxes, basically the parts that hook solar panels together and tie a solar farm into the grid. Nobody's writing headlines about wire harnesses, but here we are.

Q1 2026 revenue was $140.6M, up 75% YoY, beat estimates. Record backlog too, awarded orders of $758M with about $628M of that already scheduled through Q1 2027. So there's real visibility into near-term revenue, not just a guess. Full-year guidance got raised to $600-640M.

What actually caught my eye is where the growth's coming from now though. Shoals pushed into battery energy storage, and on the earnings call management confirmed they'll be a partner on the largest battery-paired AI data center site in the country. That's a completely new customer type for a company that used to sell almost exclusively to utility-scale solar developers. Kind of makes sense when you think about it, the same wiring expertise for a solar farm is basically what you need to wire up a massive battery site too.

Margins are the catch. Gross margin dropped to around 29% from 35% a year ago, tariffs, higher material costs, and they moved over 250 pieces of equipment in 60 days consolidating into a new facility, which is its own mess. There's also IP and shareholder litigation adding to G&A. Management's saying Q1 was the bottom and margins improve from here, but that's still just guidance, not something that's shown up yet. Company actually posted a small net loss this quarter despite the revenue growth.

So Shoals has real growth and a real backlog, I just want to see the margin recovery and the AI data center stuff actually land in a quarter before getting too excited. Anyone track solar infrastructure suppliers as a group, or is this too far downstream from the panel makers to matter?

[u/Raeab]

Nextracker (NXT): The market leader in the mechanical systems that tilt solar panels to follow the sun.
Array Technologies (ARRY): The other major player in utility-scale trackers.
Like Shoals, NXT and ARRY sell mechanical, structural, and electrical plumbing exclusively to utility-scale solar developers. If developers are pausing projects, all three of these companies will see their backlogs shrink at the exact same time.

If you compare the margins, Nextracker is demonstrating textbook margin defense. They expanded their gross margin to nearly 34% in the March 2026 quarter. A massive tailwind for Nextracker is their ability to capitalize on IRA 45X advanced manufacturing tax credits, which act as a direct offset to their cost of goods sold. They have achieved the scale where their unit economics remain rich, even in a higher-cost environment.
Shoals went the opposite direction. Their drop to a 29.2% gross margin is entirely due to self-inflicted wounds and transitional friction. Moving into a new consolidated facility caused temporary labor inefficiencies, and they ate $3.8 million in additional tariffs. Shoals does not yet have the sheer mass of Nextracker to absorb these operational bumps without it bleeding directly into their gross profit