Is Nextpower Stock a Buy Now?

Nextpower (NASDAQ: NXT) offers a product that may seem straightforward, but it provides a significant benefit to its customers. That helps explain why the company has a $5 billion backlog at the end of the second quarter of fiscal 2026, ended Sept. 26, 2025, up from $4.75 billion at the end of the first quarter. There is a lot to like about Nextpower, but there's also a notable reason to tread cautiously. Here's what you need to know.

What does Nextpower do?

Not too long ago, Nextpower was known as Nextracker. The old name made a great deal of sense, given that the company's primary product is technology that helps solar panels move to track the sun. It sounds like an easy thing to do, but it's more complicated than you may think. Nextpower's product is well respected, which is why it was able to increase its backlog by $250 million in a quarter.

Image source: Getty Images.

It is important to consider what that backlog represents. Essentially, the figure is sales that have been made for which product has yet to be delivered. Indeed, it is a spotlight on future revenues. However, the company's ability to grow its backlog means that it added more sales to the backlog than it delivered products to customers. It suggests that demand for Nextpower's products is strong.

That's good news, but there's another important factor to consider here, too. The company carries no debt on its balance sheet with around $845 million in cash. That is a very strong financial position.

Wall Street is aware of the company's business success, given that its shares have risen over 280% since its initial public offering in early 2023. And yet the stock's price-to-earnings ratio of 23.7 doesn't seem particularly outlandish. In fact, management updated its full-year fiscal 2026 guidance for revenue, earnings under generally accepted accounting principles (GAAP), and GAAP earnings per share when it reported second-quarter earnings, slightly increasing each figure. The adjusted earnings range was narrowed, which isn't quite as positive, but the low end was raised, suggesting an improved outlook.

Nextpower's name change is a big deal

If you are a more aggressive growth investor, Nextpower is likely worth a closer look. However, the company's name change is notable because it accompanies a corporate decision to move beyond the core technology the company sells. Going forward, Nextpower will also sell structural and electrical components.

Currently, the new business lines represent a small portion of the overall business, projected to account for approximately 13% of the income statement's top line in fiscal 2026. However, the new business lines are expected to grow to roughly a third of the business by the end of fiscal 2030, which is about three and a half years away. That will likely account for a material amount of the growth that management expects for the entire company over that span.

There is material execution risk for investors to consider. Nextpower is still a relatively young company and doesn't have a particularly extensive track record. While all of the new business lines are adjacent to its core tracking technology, management could be biting off more than it can chew, given the scope of the business expansion that's underway. Conservative investors will likely want to monitor the company's progress for a while before jumping aboard.

Nextpower: A company for risk takers

All investments come with risk. Nextpower appears to have a very solid core business, so the significant risk lies in the new businesses into which it is expanding. While it has the financial strength to withstand a few missteps as a company, investors are likely to view undesirable expansion results negatively. That could lead to a pullback in the stock, even though the valuation doesn't seem outlandish right now. In other words, it is a young and interesting stock that is most appropriate for aggressive growth investors. Viewed through that lens, the risk/reward balance seems fairly reasonable.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.