Array Technologies, Inc. (ARRY): 5 FORCES Analysis [Nov-2025 Updated]

You're digging into Array Technologies, Inc. (ARRY) right now, trying to see past that impressive near-term security of a $1.9 billion order book to the real competitive fight as of late 2025. Here's the quick math: the market is a squeeze play where supplier power over raw materials and customer demands for bulk discounts-historically 12% to 22% off-are high, even as the threat from new entrants is significantly blocked by IRA policy and high R&D costs averaging $12-18 million annually. Still, the rivalry with Nextracker (NXT) keeps margins tight, evidenced by ARRY trading at a lower forward P/E of 8.88 versus NXT's 17.99; you need to see the full breakdown of these five forces below to map out the near-term strategy.

Array Technologies, Inc. (ARRY) - Porter's Five Forces: Bargaining power of suppliers

The bargaining power of suppliers for Array Technologies, Inc. (ARRY) remains a significant factor influencing cost structure and margin stability, primarily due to the high material intensity of solar tracking systems.

Raw material costs, like steel, represent 45-55% of total solar tracker production expenses. This concentration means that even moderate fluctuations in commodity markets can have a substantial impact on Array Technologies' cost of revenue, which was reported at $491.054 million for the first six months of 2025.

Geopolitical actions directly translate into higher input costs for Array Technologies. Global tariffs, such as the new 25% duty on Mexico-gearsets, increase ARRY's component costs. Furthermore, Section 232 tariffs on steel doubled to 50% in mid-2025, creating substantial price separation between imported and domestic steel. As of October 2025, hot-rolled coil steel, a benchmark material, traded around $800-815 per short ton in the US Midwest market. Management had assumed about 100 basis points of tariff drag for fiscal 2025, but analysts warned this impact could be larger, potentially undermining the gross margin target of 28-29%.

Supplier leverage is somewhat mitigated by Array Technologies sourcing over 85% of US steel locally. This domestic focus is an industry benchmark, putting Array Technologies above expected Inflation Reduction Act (IRA) domestic content targets. This strategy helps Array Technologies manage delivery risk and quality issues associated with international sourcing.

The market for specialized solar tracker components is concentrated, limiting sourcing options for certain critical parts. While Array Technologies has built a network of over 50 suppliers in the U.S. with committed capacity exceeding 40 GW, the overall solar tracker market concentration shows that the top players, including NEXTracker, Arctech Solar, and Array Technologies, held 49% of the 2024 global revenue.

Here's a quick look at the cost and sourcing dynamics impacting supplier power:

The reliance on specialized components, such as drives and gearsets, means that suppliers in these niche areas hold inherent leverage. This is evidenced by the focus on managing gearset costs amidst new tariffs.

To counter this, Array Technologies focuses on strategic partnerships and domestic content:

• Secured long-term agreement with Steel Dynamics for fixed coil supply.
• Goal to reach 100% domestic content eligibility by H1 2025.
• Maintains a strong U.S. supplier network exceeding 50 partners.
• Focus on using recycled aluminum/steel where possible to control input quality and sustainability profile.

Array Technologies, Inc. (ARRY) - Porter's Five Forces: Bargaining power of customers

You're looking at the power customers hold over Array Technologies, Inc. (ARRY), and honestly, it's a mixed bag, leaning toward significant leverage in certain areas. The utility-scale sector, which is Array Technologies, Inc.'s bread and butter, naturally means dealing with a smaller pool of very large buyers. In 2024, the U.S. market, where much of this power resides, accounted for approximately 70% of Array Technologies, Inc.'s revenue. Plus, EPCs (Engineering, Procurement, and Construction firms) made up 69% of sales back in 2023, showing where the volume flows. So, yes, customer concentration in the utility-scale space definitely keeps the pressure on pricing.

When you look at the current contract pipeline, the power dynamic is clear. Array Technologies, Inc. ended the third quarter of 2025 with a total executed contracts and awarded orders backlog of $1.9 billion, excluding the recent APA Solar contribution. That's a huge number providing near-term revenue stability, which gives Array Technologies, Inc. some leverage in negotiations, especially since over 95% of that $1.9 billion order book is for the domestic market. Still, the history shows these large customers push hard. For instance, Array Technologies, Inc. noted that its 2024 revenue decline was partly due to an Average Selling Price (ASP) decline, which suggests successful customer negotiation on price.

Here's the quick math on how Array Technologies, Inc. manages cost pressure from these buyers:

The biggest shift in leverage right now comes from government policy, which helps Array Technologies, Inc. push back against customer demands for lower prices. Customers are intensely focused on maximizing Inflation Reduction Act (IRA) incentives. Array Technologies, Inc. has made its 100% domestic content trackers a key differentiator, achieving this compliance under U.S. Treasury guidance (Notice 2025-08). This means projects using their trackers, like the 200-MWAC Emerald Green Solar project in Indiana, qualify for the maximum Assigned Cost Percentage (ACP) incentives. This compliance de-risks projects for developers, giving Array Technologies, Inc. a strong negotiating position against competitors who can't meet the tightening domestic thresholds, such as the 40% foreign assistance limit starting in 2026.

You should keep an eye on these specific customer-related dynamics:

• Power is high due to customer concentration in the utility-scale sector.
• The current backlog of $1.9 billion provides near-term revenue stability.
• 70% to 75% of contracts allow direct pass-through of tariff costs.
• 100% domestic content compliance secures maximum IRA tax credits for customers.

Array Technologies, Inc. (ARRY) - Porter's Five Forces: Competitive rivalry

You're looking at a market where the two biggest players, Array Technologies, Inc. (ARRY) and Nextracker (NXT), are locked in a tight contest for utility-scale solar projects. This rivalry is definitely intense, and you see it reflected in the valuation gap. As of late 2025, Array Technologies, Inc. (ARRY) trades at a forward P/E of 8.88 versus Nextracker (NXT)'s 17.99. That difference suggests the market is pricing in either higher perceived risk or lower expected growth/profitability for Array Technologies, Inc. (ARRY) compared to its main rival, even though Array Technologies, Inc. (ARRY) is showing strong execution.

The core of the competitive pressure comes down to cost. The industry is highly price-sensitive, which is a constant headwind for margins. You have to remember that the average tracker price fell to $0.38 per watt by 2023. While newer data suggests utility single-axis tracker costs can be as low as $0.05 to $0.20 per watt, that historical drop shows how quickly pricing power erodes. This environment forces constant innovation just to maintain a competitive edge on the cost side.

Still, Array Technologies, Inc. (ARRY) is executing well on its current book of business. The company posted Q3 2025 revenue of $393.5 million, which was a 70% year-over-year increase. That strong top-line number shows Array Technologies, Inc. (ARRY) is winning bids despite the pricing pressure. To be fair, the acquisition of APA contributed about $17 million to that Q3 2025 revenue, but the overall order book is robust at $1.9 billion.

Global competition is intensifying, and that means long-term pricing risks and margin pressure aren't going away. The global solar tracker market was valued at approximately $8.5 billion in 2023, with projections showing a compound annual growth rate exceeding 15% through 2030. This growth attracts more players and keeps established ones like Array Technologies, Inc. (ARRY) and Nextracker (NXT) fighting for share. For context on the competitive landscape, here's a quick look at how the two giants stack up on some key metrics, based on recent analyst views:

The difference in valuation multiples is stark, but the lower PEG ratio for Array Technologies, Inc. (ARRY) at 0.63 versus Nextracker (NXT)'s 3.46 suggests that if Array Technologies, Inc. (ARRY) can deliver on its earnings growth expectations, it might be priced more attractively for future growth.

The competitive dynamic also involves technology differentiation and market focus. You see this in how they secure volume:

• Array Technologies, Inc. (ARRY) order book is over 95% domestic.
• New products make up about 40% of Array Technologies, Inc. (ARRY)'s current order book.
• Nextracker (NXT) held a global market share fluctuating between 26% and 33% historically, while Array Technologies, Inc. (ARRY) held 22% as of 2022.
• The U.S. solar market saw PV account for 69% of new electricity-generating capacity in Q1 2025.

Ultimately, the rivalry is a battle for margin in a commoditizing segment. Array Technologies, Inc. (ARRY)'s adjusted gross margin in Q3 2025 was 28.1%, which management noted was supported by a mix shift to domestic projects and higher Average Selling Prices (ASPs). Still, the company faces headwinds from commodity inflation and tariff drag, which is why long-term margin stability is a key competitive risk.

Finance: draft 13-week cash view by Friday.

Array Technologies, Inc. (ARRY) - Porter's Five Forces: Threat of substitutes

You're looking at the substitutes Array Technologies, Inc. (ARRY) faces, and honestly, the landscape is a mix of direct competition and alternative energy philosophies. The first big substitute is the simpler, less dynamic racking technology: fixed-tilt systems. These are definitely a lower-cost entry point for certain solar projects, especially where land is cheap and irradiance isn't top-tier.

Here's the quick math on that trade-off, which you see clearly when comparing the upfront spend versus the long-term energy capture. What this estimate hides is that the value proposition shifts based on the project's Power Purchase Agreement (PPA) structure.

To counter this inherent cost difference, Array Technologies, Inc. made a strategic move in 2025 by acquiring APA Solar. This deal, valued at an enterprise value of approximately $179 million, brings fixed-tilt solutions directly into the ARRY portfolio. Before the acquisition, APA generated about $129 million in revenue and $25 million in EBITDA in 2024 (excluding 45X credits). This acquisition is key because it expands ARRY's addressable market by nearly 40% and allows them to offer an integrated tracker-plus-foundation package, which simplifies installation in tough soil conditions. The transaction closed in the third quarter of 2025, so you should see its impact on guidance updates.

Still, the competition isn't just other solar hardware. Utility-scale solar competes for the utility baseload power budget against established sources like natural gas turbines. The Levelized Cost of Electricity (LCOE) comparison shows how close the race is, even in 2025. According to Lazard's July 2025 analysis, unsubsidized utility-scale solar LCOE sits between $0.038/kWh and $0.078/kWh. For comparison, gas combined cycle plants, under the same criteria in a June 2025 report, range from $0.048/kWh to $0.107/kWh. Peaker plants are far more expensive, hitting $0.138/kWh to $0.262/kWh.

Array Technologies, Inc. is actively reducing the threat of substitution from site-specific risks-like weather-by pushing specialized products. The market is clearly responding to these innovations; new products like OmniTrack and SkyLink now represent over >35% of the total order book as of late 2025. For extreme weather, the new Hail XP platform, which launched in May 2025, directly addresses a huge financial risk: hail damage. While hail events only cause 2% of insurance claims in utility-scale solar, they account for more than 50% of total claim costs, with the average claim reaching $58 million. Hail XP mitigates this with a 77-degree bidirectional stow angle, and ARRY secured its first order for this platform.

• Hail XP uses AC-Powered Stow-on-Demand, not batteries.
• Hail XP offers a 77-degree stow capability.
• OmniTrack and SkyLink make up >35% of the current order book.
• APA Solar deal closed in Q3 2025 for $179 million.

Array Technologies, Inc. (ARRY) - Porter's Five Forces: Threat of new entrants

You're looking at a market where the initial capital outlay for a serious competitor is substantial. Start-up costs are high; solar tracker R&D investment averages $12-18 million annually. For Array Technologies, Inc., this high bar is reinforced by its own scale, reporting Q3 2025 revenue of $393.5 million and projecting full-year 2025 revenue between $1.25 billion and $1.28 billion.

New entrants face policy barriers, as the Inflation Reduction Act (IRA) favors incumbents with established US domestic content supply chains. The IRA has spurred significant domestic investment, with solar manufacturing investment reaching nearly $6.0 billion in 2024. Array Technologies, Inc. explicitly notes that its updated full-year 2025 guidance reflects anticipated benefits from the IRA's Section 45X Advanced Manufacturing Production Credit. This policy structure rewards companies that have already built out or are rapidly building domestic capacity, making it tough for a new player to immediately qualify for the most lucrative incentives.

The need for a global, diversified, and reliable supply chain is a significant barrier to scale. Array Technologies, Inc. has actively managed this, evidenced by its total executed contracts and awarded orders at September 30, 2025, reaching $1.9 billion (excluding the recent APA acquisition). Building out the complex logistics and manufacturing footprint required to service utility-scale projects globally demands massive upfront capital and proven execution history.

The industry's consolidation trend makes it defintely harder for small, new players to gain traction. Established players are actively acquiring to secure technology and market share. For instance, Array Technologies, Inc. successfully completed the acquisition of APA Solar in Q3 2025, following its earlier acquisition of Sti Norland. This pattern is industry-wide; Nextracker acquired utility-oriented renewable energy company Ojjo for $119 million in June 2024.

Here's a quick look at how the established players are positioning themselves against potential new entrants:

The barriers to entry are not just financial; they are structural, tied to regulatory compliance and the sheer scale of existing order books. New entrants must overcome the established relationships and proven capacity that Array Technologies, Inc. and its peers have locked in.