An AI training campus needs the electricity of a mid-sized city, and it needs it now. Connecting a load that size to the grid takes years. Solaris brings the power plant to the site instead: it owns gas turbines on trailers, installs them behind the meter, and rents megawatts by the month on multi-year contracts. The customer supplies the gas and carries no fuel risk. Speed is the product.
Source: Solaris Energy Infrastructure Q2 2026 results and 8-K (5 Aug 2026); Q2 2026 Form 10-Q; guidance raise and Q1 2027 guide (8 Sep 2026); convertible and senior-note filings (May 2025, Sep 2026).
Why I chose it
1. It sells the one thing AI cannot wait for: power, now
Connecting several hundred megawatts to the grid in ERCOT or PJM takes years; large-load queues are measured in five to eight. Solaris installs turbines behind the meter and energises a site in months. That speed, plus turbine lead times of 18 to 36 months that keep new supply scarce, is the moat. A hyperscaler that has already bought billions in GPUs cannot leave them idle waiting for a grid connection.
In plain termsThe chips are ready but the electricity is not. Solaris is the fastest way to plug them in.
2. The demand is contracted, not hoped for
About 2.2 GW is under long-term contract with three investment-grade technology counterparties on 7 to 18 year terms. Guidance has been raised in every quarter for six consecutive quarters; the Q1 2027 adjusted-EBITDA guide of $200 to 240 million implies an $800 to 960 million annualised run-rate, against $244 million earned in all of 2025. Contracts are paid per megawatt per month whether or not the turbines run.
In plain termsThe profit expected next year is roughly four times last year's, and most of it is already signed under contract.
3. A cash-cow legacy funds the growth engine
The Power Solutions segment was 72% of Q2 2026 revenue and 89% of segment EBITDA and is the growth engine. The legacy Solaris Logistics business, last-mile frac-sand rental, is cyclical and shrinking but still generates more than $20 million of free cash flow a quarter that helps fund the power build. I treat logistics as a cash source, not a valuation driver.
In plain termsAn older, steady business throws off cash that helps pay for the new one.
4. The capital structure is the differentiated angle
This is the section most coverage skips and the one my lens is built on. Gross debt reaches about $3.8 billion once the $1.25 billion 7.000% notes due 2032 close on 1 October, with a roughly $2.2 billion maturity tower already built for 2031. Net leverage peaks near 5.6x at year-end 2026 and falls toward 3x only when the 2027 run-rate arrives. The equity's fate is tied to a dated demand ramp by a debt structure that cannot wait. That is precisely the setup my research is designed to read.
In plain termsThe company borrowed heavily to build ahead of demand. If the demand lands on schedule the debt shrinks quickly; if it slips, the debt becomes the story.
What would break it
Each signal below is observable in public data. This is a leveraged business tied to a dated ramp, so a single missed milestone matters more here than for a debt-free name.
| Signal | What I would see | Where it shows first |
|---|---|---|
| Energisation slips | A key site misses its dated start. Each two-quarter slip is worth roughly $150 million of EBITDA and adds to net debt. The demand ramp is what de-levers the balance sheet, so timing is the whole thesis. | Q3 print language on "energised"; JV lease note in the 10-Q |
| A customer builds its own power | The largest counterparty is an xAI affiliate, and xAI has already bought its own 1.1 GW mobile turbine fleet. Contracted megawatts are safe for the term; renewals and new megawatts are not. | Any xAI-affiliate award to a third party; JV distributions |
| Leverage covenant pressure | Interest cover is about 2.1x this year's EBITDA against a 3.0x covenant tested on trailing figures. If the ramp slips two quarters, trailing cover approaches the covenant. Severe if triggered. | Secondary bond prices; rating outlooks; any RCF amendment |
| The credit market disagrees | The 2031 notes trading below par while the equity re-rates would mean the two markets disagree, and the credit market is usually the one to trust. | Secondary levels on the 6.375% 2031s and 7.000% 2032s |
| Permitting / litigation | A Clean Air Act suit and a state removal order affect temporary turbines at the Southaven site; the permanent 1.2 GW plant there holds an uncontested permit, but headline risk is live. | Mississippi court rulings; MDEQ compliance filings |
| The re-rating never comes | My upside depends on the multiple moving from the guide-year level toward the contracted run-rate as the 2027 dates print. If the market keeps valuing the guide year rather than the run-rate, the shares can stall even with the business on plan. | Multiple on forward EBITDA versus peers |
Known noise, not a thesis breaker: short interest is about 25% of the float and realised volatility is high, with three single-day moves above 10% in eight weeks. Part of the short position is convertible hedging rather than a directional bet. Expect the price to move violently in both directions around each print.
How I value it
A key site and the JV lease slip two quarters and ~800 MW of ordered capacity stays unsigned, so the run-rate arrives late and the multiple stays where it is. 2027 EBITDA near $900M at ~10.5x.
The ramp lands on the announced calendar and the open capacity signs at framework terms, so the market prices the contracted run-rate rather than the guide year. 2027 EBITDA near $1,000M re-rating toward ~11.5x.
Open capacity signs early at rising rates, the services roll-up proves accretive and a fourth hyperscaler signs, re-rating the shares to independent-power multiples. 2027 EBITDA near $1,100M at ~12.3x.
Where the value comes from. The base case lands close to the analyst mean of about $97, but I reach it conservatively: I credit the ~800 MW of open capacity only in the bull case and value the services roll-up at zero until it reports as a segment. The whole return therefore rests on the market re-rating the shares from the guide-year multiple to the contracted run-rate multiple as the 2027 energisations print. If those dates slip, the re-rating slips with them. That is why my discipline sits in the entry and the checkpoints below, not in the target.
Entry discipline and dated checkpoints
The base value sits well above the current price, but this is a leveraged name tied to a dated ramp and it moves violently around each print. So I stage the entry rather than buy it all at spot: a starter is defensible here, with the bulk added into weakness or on confirmation.
Glossary
- Behind-the-meter
- Power generated on the customer's own site, feeding the load directly without passing through the public grid.
- Bridge power
- Temporary on-site generation used until a permanent plant or grid connection is ready.
- MW-month rental
- Solaris's unit of revenue: a fixed fee per megawatt of capacity per month, paid whether or not the turbine runs.
- Interconnection queue
- The multi-year waiting line to connect a large new load or plant to the grid (ERCOT in Texas, PJM in the mid-Atlantic).
- Adjusted EBITDA
- Earnings before interest, tax, depreciation and amortisation, adjusted for one-off items. The profit the debt is sized against.
- Net debt / EBITDA
- Total debt minus cash, divided by annual EBITDA; the standard measure of how leveraged a company is.
- High-yield (BB-)
- A credit rating below investment grade; borrowing costs more and covenants matter more.
- Covenant
- A financial test in a loan agreement; breaching it can trigger default. Solaris's revolver tests leverage and interest cover.
- Convertible note
- Debt the holder can exchange for shares at a set conversion price.
- Capped call
- An option the issuer buys to offset share dilution from conversion, up to a cap price ($88.00 on the 2031 notes).
- Non-recourse
- Debt secured only on a specific project's assets; the lender cannot claim against the parent company.
- IPP
- Independent power producer: a company that generates electricity to sell under contract (Vistra, Constellation, Talen).