Cramer: First Solar in the Short Squeeze of a Lifetime

First Solar, which rallied sharply this week and is up over 72 percent year-to-date, is sending short sellers running for the exits, said CNBC's Jim Cramer, who explained why the stock has gained rapid favor in the market.

"There was a squeeze yesterday of unbelievable proportions—First Solar," Cramer said on "Squawk on the Street" Wednesday. "Now, this is a China story. What you realize is that the Chinese have walked away from solar."

Cramer reminded investors that there was a bankruptcy protection filing in March of a major Chinese solar manufacturer, Suntech Power Holdings. "First Solar has stepped into that vacuum with a low-cost solar module and it just dazzled people," he said.

Cramer added: "Next thing you know, this stock, which had been a free-fire zone for the shorts, becomes the squeeze of a lifetime. This is a fascinating play that probably is overdone, but First Solar was on everybody's lips."

—By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul