By Kit Norton
Shares of Solaris Energy Infrastructure, historically an oil and gas field services and solutions provider, jumped on Tuesday as the company announced a third data center deal, dulling the impact of reporting first-quarter profit that missed Wall Street's expectations.
Solaris Energy stock advanced as high as $81.24 before settling up 4.2% to $73.66 on Tuesday. Shares have revved 54% higher this year, gaining 25% in April alone, as Solaris has positioned itself to offer on-site energy to data centers for artificial intelligence.
While Solaris late Monday reported first-quarter earnings of 32 cents a share -- up from 14 cents a year ago but slightly below Wall Street's forecast of 33 cents a share -- the company also announced that on April 24 it entered into a third long-term power contract to provide more than 600 megawatts of power capacity.
The new customer is an "affiliate of an investment-grade, global technology company" for a term of 10 years, with an option to extend an additional 5 years, according to the company. Solaris added that it expects to begin power deployments in late 2026 and scale through 2028.
Co-CEO Bill Zartler on the first-quarter conference call Tuesday said Solaris continues to have active discussions for new projects with both current and new customers.
"We are encouraged by the numerous additional growth opportunities we see with our current customers, as well as a general alignment toward a more standard contractual arrangement," Zartler said.
"The broader power market continues to reinforce and support our strategy," he added. "Grid interconnection delays are continuing to expand, which, given the market's focus on speed-to-compute, has accelerated adoption and long-term behind the meter power solutions."
While Solaris Energy is primarily an oil and gas services play, in 2024 the company acquired Mobile Energy Rentals for $323 million, giving it access to power generation solutions along with Mobile Energy Rentals' expertise in installing mobile gas turbines and electric boxes on customers' sites.
Now, Solaris owns and operates on-site power generation for data centers and provides primary power, power equipment procurement, and engineering. Analysts have said this enables faster time to power by avoiding electric grid bottlenecks, making Solaris an attractive partner for hyperscalers.
A Morgan Stanley analyst team, led by David Arcaro, on Tuesday wrote that the latest data center deal "strengthens" their Overweight rating and their $81 price target for Solaris.
Arcaro wrote he expects Solaris Energy's multiple to expand, reflecting the enhanced cash flow visibility provided by the new long-term contract. Assuming the 600 megawatts are contracted at $300 per kilowatt, Morgan Stanley estimates value creation of about $450 million, or $5 a share, from the data center deal.
"We would not rule out lower margins in a long-term contract," Arcaro wrote.
Along with first-quarter earnings of 30 cents a share, Solaris Energy reported first-quarter revenue grew 55% to $196.2 million, above Wall Street's call for $183.4 million, according to FactSet.
Solaris increased its second-quarter adjusted Ebitda guidance to $83 million to $93 million, up from its previous $76 million to $84 million outlook. The company also initiated third-quarter adjusted Ebitda guidance at $80 million to $95 million, with a midpoint well below Wall Street's $100.5 million forecast.
Solaris executives told analysts Tuesday the third-quarter guidance reflects shifting dynamics in a joint venture project as well as deliveries of new equipment in the second half of 2026.
Arcaro noted Tuesday that the conservative third-quarter guidance could be that it depends on the "still-uncertain ramp pace of contracts in the near term."
Write to Kit Norton at kit.norton@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 28, 2026 11:23 ET (15:23 GMT)
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