Nextracker Inc. (NXT): A Bull Case Theory

Ricardo Pillai

Tue, May 13, 2025, 7:05 AM 5 min read

We came across a bullish thesis on Nextracker Inc. (NXT) on Substack by Canopy Research. In this article, we will summarize the bulls’ thesis on NXT. Nextracker Inc. (NXT)'s share was trading at $44.60 as of May 8^th. NXT’s trailing and forward P/E were 11.01 and 11.05 respectively according to Yahoo Finance.

A typical home improvement project with workers installing a residential solar energy system.

The sharp sell-off across the solar sector has created one of the market’s most compelling mispricings, and Nextracker stands out as a prime beneficiary. While many investors fled renewable energy names amid higher interest rates, policy uncertainty, and fears of overcapacity, Nextracker quietly outperformed on nearly every operational and financial front. Despite building a $4.5 billion backlog, widening margins, and closing the year with a fortress balance sheet, the market continues to treat Nextracker like a low-margin commodity hardware maker, overlooking its evolution into a tech-enabled cash engine. As the industry leader in solar tracker systems — which optimize panel angles to increase energy yield — Nextracker has developed a defensible moat through patented tracker architecture and machine learning optimization software, TrueCapture. This differentiation has kept it entrenched as the global leader, with 23% market share and nine consecutive years as the top shipper worldwide.

Even as macro headwinds battered solar stocks, fundamentals strengthened. Global installations hit a record 593 GW in 2024, up 29% year-over-year, led by utility-scale solar — where Nextracker thrives. In the U.S. alone, utility-scale deployments surged 33%, comprising over 80% of new builds, thanks to power purchase agreements as low as $25/MWh and demand from AI-driven data centers. This momentum is reinforced by long-term tailwinds from electrification trends and policy incentives like the Inflation Reduction Act, which locks in a 30% investment tax credit and bonuses for U.S.-made components. These drivers triple domestic module production and anchor utility solar’s central role in meeting future energy demand. While solar sentiment remains fragile, these durable trends set up a major valuation dislocation for top-tier players like Nextracker.

Operationally, the company excels through a hybrid business model that integrates software and hardware. It generates 10–12% of its revenue from higher-margin software and services, and its TrueCapture and NX Navigator tools optimize energy output in real-time using billions of data points. This creates a flywheel effect: more installed trackers lead to smarter algorithms, which drive better energy yields and stickier customer relationships. Nextracker’s hardware, meanwhile, is built through an asset-light approach that leverages manufacturing partnerships in the U.S., Mexico, and India. Capital expenditures run at just ~2% of revenue, far lower than peers like Array and Arctech, whose capex is 5–7%. This allows Nextracker to scale faster, remain more agile, and convert a larger portion of its revenue into profit.