SunPower Corporation (NASDAQ: SPWR) has been nothing but disappointment for investors over the past twelve months.
Still, there’s reason to believe that its future may be markedly different from the past year.
How may Amazon and Microsoft help SunPower?
Renewables do not currently make up a significant portion of power generation in the United States. Solar, for example, accounts for just 3.9% of the total electricity generation in the U.S. at the moment.
Plus, there are concerns of reliability coupled with clean energy as well. That’s partly why solar stocks haven’t been able to do all that well in recent months.
But experts believe a change may be on the horizon as the tech titans like Microsoft Corp and Amazon.com Inc switch to powering their data centres with clean energy.
Why is data centre demand a big deal for solar stocks?
Note that data centres sit right at the heart of internet and artificial intelligence. The aforementioned tech-driven demand, therefore, may be a material benefit for solar companies like SunPower.
Plus, experts are increasingly convinced that shifting to renewables is more attractive now that the price of solar equipment (modules and batteries) have come down significantly.
“They are cheaper, they are clean and, quite frankly, easier to site, so the future is going to be renewable energy”, said Andres Gulski – the chief executive of AES Corporation.
AES is an energy company based out of Arlington, Virginia that has recently sizable power agreements with Amazon and Google.
Does SPWR power data centres?
Over the past five years, about 40% of the overall demand in the U.S. for utility-scale solar projects have come from Google, Meta Platforms, Microsoft, and Amazon.
And that demand, moving forward, will likely accelerate sharply considering these behemoths are committed to switching completely to clean energy and electricity requirement for AI is about ten times that of a conventional Google search, as per a recent note from analysts at UBS.
About 36 gigawatts of solar is expected to be added to the U.S. grid in 2024 – close to double versus last year’s increase.
Battery storage will also more than 2x this year to 14.3 gigawatts, as per a recent estimate from the Department of Energy.
While SunPower Corporation does not directly power data centres, adoption of solar energy by large companies like Microsoft and Amazon can indirectly benefit SPWR in terms of increased awareness, research and innovation, and market growth that may result in increased momentum across the board.
So, SunPower shares may benefit if the company hangs in there and doesn’t go bankrupt before the aforementioned benefits start to kick in.
Once they do, the solar stock may see an upsized move which could squeeze the short sellers out of $SPWR. A whopping 62% of the SunPower float is currently sold short, as per Fintel.io.
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