By Mackenzie Tatananni

For the past year, defense and artificial intelligence have captured investors' imaginations, leaving green energy out in the cold. That dynamic is shifting fast, however, as electricity demand and fuel prices both rise.

Against that backdrop, Nextpower, which makes solar tracking technology, is working to capture more share in the renewable energy market. The company said Thursday that it had agreed to acquire Prevalon Energy, a battery energy storage solutions $(BESS)$ business, in a deal valued at up to $365 million. The transaction is slated to close in the second quarter.

The deal marks Nextpower's foray into the burgeoning BESS market, and is also the company's single largest transaction since spinning off from its parent, Flex, in 2024 "by a substantial margin," Jefferies analysts wrote.

Nextpower stock spiked 14% to $156.50 in Friday trading, compared with the S&P 500's 0.3% rise.

Nextpower has acquired nearly a dozen business since it separated from Flex, diversifying itself well beyond solar trackers. Battery energy storage systems -- which store electricity and release it when needed -- could be the next frontier, seeing as they are a critical enabler of renewable energy generation.

Nextpower expects the Prevalon deal to be accretive to its revenue. The company is now targeting fiscal 2027 revenue in the range of $4 billion to $4.4 billion, up from a previous forecast of $3.8 billion to $4.1 billion. Adjusted earnings are also expected to be higher, landing between $4.30 and $4.73 a share versus an earlier outlook of $4.21 to $4.59.

Prevalon has emerged as a prime beneficiary of the data-center boom. The company works with several unnamed cloud compute providers, noting Thursday that it has secured "1.3 gigawatts of firm supply contracts supporting AI and hyperscaler infrastructure deployments."

But artificial intelligence isn't the only tailwind for so-called green technology companies. Other trends are equally supportive -- and perhaps more crucially for Nextpower, could signal the resurgence of renewable energy. The most notable of these is surging fuel prices during the Iran war.

As RBC Capital Markets noted on Friday, earnings-call commentary among renewable energy firms since the start of the conflict in the Middle East "has been broadly constructive."

This, of course, stems from the closure of the Strait of Hormuz, a crucial maritime chokepoint that handles roughly 20% of the world's oil. The resulting delays have driven up crude prices, spilling over into fuel costs and airfare.

While these higher costs burden consumers, they are a boon for green technology companies. Elevated prices and a renewed focus on energy security are driving demand for electric vehicles, heat pumps, and renewables.

RBC analysts noted that interest in defense and AI dominated markets last year -- at the expense of environmental, social, and governance themes, which saw a slowdown in investor inflows. The clean energy and transition materials sector bottomed in 2025 after the One Big Beautiful Bill Act stripped subsidies from wind, solar, and EVs in favor of expanded support for fossil fuels and nuclear power.

This year, steady AI demand first boosted green tech companies, and now the security-driven narrative is another catalyst.

The war in Iran is shaping up to be a "game changer" for EVs, according to consulting firm Wood Mackenzie, which projects that 80 million vehicles could enter the global market by 2030 as a direct result of the conflict.

Clean-energy investment inflows are nearing the peaks seen during the 2022 Russian invasion of Ukraine, RBC noted. At the time, the surge proved temporary, ultimately cut short by rising inflation and interest rates.

History isn't necessarily repeating itself this time around, though.

"Relative valuations had also reached past highs during that period, a dynamic we are not yet observing in our models," analysts wrote.

Another difference: The current demand environment is powered by a persistent growth engine, ongoing data-center construction.

RBC didn't mention Nextpower by name. However, analysts pointed to a trend spanning "most energy transition themes."

"In some cases, the improvement in demand predates the conflict, but recent geopolitical developments have reinforced the trend," analysts wrote.

The bottom line: Nextpower's $365 million bet on Prevalon arrives at a perfect time, as the company benefits from a dual wave of geopolitical shocks and AI-fueled demand. Against this backdrop, the upgraded revenue guidance looks less like a stretch and more like a sign of what's to come.

Write to Mackenzie Tatananni at mackenzie.tatananni@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.

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May 29, 2026 11:33 ET (15:33 GMT)

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