American Superconductor Corporation AMSC shares have fallen 26.4% year to date (YTD), significantly underperforming the broader Zacks Computer & Technology sector’s decline of 11.8% and the Zacks Electronics - Miscellaneous Components industry’s 8.3% drop.

It has also lagged industry peers such as OSI Systems OSIS, Universal Display OLED and Fabrinet FN. While OSI Systems shares have risen 16.1%, Universal Display and Fabrinet have declined 4.6% and 10.2%, respectively, over the same period.

American Superconductor’s recent decline has also stemmed from a widespread sell-off in tech stocks triggered by fears of escalating trade tensions and slowing economic growth.

This steep decline raises the question: Should investors cut their losses and exit, or is it worth holding on to? While the near-term headwinds are real, the long-term growth story for American Superconductor remains intact, making a strong case for holding the stock.

Diversified Offerings to Aid AMSC’s Prospects

American Superconductor’s diversified offerings cater to a broad range of industries, including utilities, renewables and defense. The company’s D-VAR systems, which stabilize power grids and advanced wind turbine designs, continue to see strong demand. Its recent acquisition of NWL expands its footprint in the military and industrial markets.

With global defense budgets on the rise, American Superconductor’s marine systems are well-positioned to benefit from increased naval investments. These systems address critical challenges for naval fleet, opening up growth opportunities in the defense sector.

The company's order backlog further illustrates its growth trajectory. In the third quarter of fiscal 2025, American Superconductor secured more than $57 million in new orders, with 75% from the Grid business and 25% from the Wind business. Notably, the trailing 12-month backlog exceeded $200 million and the total backlog surpassed $300 million, indicating sustained demand across diverse markets, including renewables, industrials, utilities and military.

Looking ahead, American Superconductor's diversified project portfolio and strategic market positioning provide a solid foundation for continued expansion. With a focus on grid modernization, renewable integration and defense applications, the company aligns with global trends in decarbonization and efficiency.

Momemtum in Wind & Grid Markets to Support AMSC’s Growth

American Superconductor's Wind and Grid business segments continue to be the key drivers of its growth, supported by increasing demand for renewable energy solutions and grid modernization efforts.

The Grid segment is experiencing strong growth as utilities and industries invest in more resilient energy infrastructure to enhance reliability and efficiency. In the third quarter of 2024, this segment's revenues saw a 56% year-over-year increase, driven by the NWL acquisition and a rise in shipments of new energy power systems.

The Wind segment has seen significant growth, driven by increased demand for electrical control systems that enhance wind turbine performance. As the wind energy sector continues to expand, American Superconductor's advanced technology solutions have supported this upward trend. In the third quarter of 2024, the Wind segment's revenues marked a 58% year-over-year increase.

Strengthening its position across its key markets is likely to continue driving American Superconductor’s financial performance. The Zacks Consensus Estimate for fiscal 2026 revenues indicates a year-over-year increase of 18.1%.

Conclusion

Though the near-term macroeconomic challenges persist, American Superconductor’s leadership in clean energy and grid modernization, coupled with growing defense opportunities, suggests that it is well-positioned to deliver sustained growth. The company’s innovative solutions and robust financial performance make the stock worth holding on to.

AMSC currently has a Zacks Rank #3 (Hold. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

American Superconductor Corporation (AMSC) : Free Stock Analysis Report

OSI Systems, Inc. (OSIS) : Free Stock Analysis Report

Fabrinet (FN) : Free Stock Analysis Report

Universal Display Corporation (OLED) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research