What happened 

Shares of solar stocks jumped big on Friday after two positive earnings reports. Investors have been wondering how far the solar industry's demand had fallen in the second quarter of 2020 and the answer may be that it actually grew. 

First Solar (FSLR 1.53%) and Canadian Solar (CSIQ -1.87%) were the two who reported earnings and their shares climbed as much as 21.8% and 13.1%, respectively, in early trading. At 12:15 p.m. EDT shares were still up 12.1% and 7.6%, respectively, on the day. 

Neither Enphase Energy (ENPH -2.17%) nor SunPower (SPWR -13.37%) reported earnings today, but they followed the move by First Solar and Canadian Solar. Enphase's shares jumped as much as 6.2% and are now up 1.3% while SunPower's rose up to 10.5% and are currently trading 4.6% higher. 

Solar panels with an urban background.

Image source: Getty Images.

So what

First Solar's was the big earnings announcement today and the company reported $642 million in sales and net income of $36.9 million, or $0.35 per share. That easily topped analyst estimates for earnings of $0.25 per share. 

In a separate announcement, First Solar said it will sell its North American operating and maintenance business to NovaSource Power Services. Details of the transaction weren't disclosed, but the deal is expected to close late in 2020.

Before the market opened this morning, Canadian Solar also reported earnings that were surprisingly strong. Revenue was up 4.9% to $706.2 million and net income was $20.6 million, or $0.34 per share. What was extremely impressive is that shipments were up 36% from a year ago to 2.91 gigawatts and gross margin remained high at 21.1%. 

Enphase Energy and SunPower are riding the news higher, but they should also benefit from growing solar demand globally, so it makes sense that their shares are trading higher as well. 

Now what

These quarterly reports are really the first time investors have gotten to see how the solar market is holding up amid the COVID-19 pandemic. The answer appears to be that demand is doing well globally and we may even see industry growth for the year, which would have been shocking just a few months ago. 

What I find encouraging is that two of the solar industry's biggest players are now reporting steady profits even at a time when the economy is struggling overall. We may finally be seeing the solar industry reach a point where companies have the strategic position and manufacturing scale to be profitable long-term. And that's what will ultimately drive solar stocks, and renewable energy stocks more broadly, higher.