3 Stocks Set For Major Upside From Inflation Reduction Act — Why Tesla Misses Goldman's List

Goldman Sachs analysts have highlighted nine companies with significant earnings exposure to Inflation Reduction Act (IRA) incentives.

With Donald Trump returning to the White House in January, the market is assessing how his policies might influence renewable investments. Goldman's note includes companies primarily in the clean technology sector, where incentives from the IRA have become integral to operations.

The bank's analyst, Brian Lee, has highlighted three stocks with strong upside potential, even considering potential challenges in Trump's second term.

Array Technologies ARRY, a leader in solar tracking solutions for utility-scale projects, holds a strong domestic market position. Benefiting from the IRA's 10% bonus for domestic content, Array's potential gains from utility-scale solar demand are substantial, and Lee projects a 114% upside.

The company's manufacturing footprint supports eligibility for IRA tax benefits, yielding credits that have bolstered its gross margins to around 35% in recent quarters. Furthermore, he anticipates the company could see IRA-related cost reductions of up to 8% annually by 2026. The stock is currently down 64% year-to-date.

Lee sees Enphase Energy ENPH, a major producer of solar microinverters, with a 75% upside due to IRA incentives. Enphase benefits from domestic manufacturing credits for microinverters, averaging around $27 to $42 per unit, depending on configuration.

The incentives significantly support Enphase's cost structure, with expected credits projected to reach approximately $275 million by 2026. Lee suggests that this subsidy could cover up to 30% of Enphase's non-GAAP EPS within two years. So far, Enphase is down 44% year-to-date.

Nextracker NXT also benefits from the IRA's manufacturing credits, with a projected upside of 58%. As the leading U.S. provider of solar tracking systems, Nextracker's domestic manufacturing capacity aligns well with the IRA's requirements, which offers a financial lift through torque tube and fastener credits.

Projected IRA credits exceed $204 million by 2027, supporting the company's margin through reduced cost of goods sold.

Meanwhile, Goldman analyst Mark Delaney maintains a neutral stance on Tesla Inc TSLA. While the company benefits directly from the IRA through credits of up to $45 per kWh for battery cells and indirectly through a $7,500 EV consumer tax credit, Delaney notes these advantages are likely already reflected in Tesla's stock valuation—currently at 72.7x its earnings. The benefit of Elon Musk's newly found foothold in Trump's inner circle has yet to materialize.

Though IRA incentives can reduce production costs by around $1,000 to $4,500 per vehicle, the analyst cautions that competition and market saturation may counterbalance these savings, keeping Tesla's potential gains from the IRA modest compared to other, more focused clean-energy stocks.

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