Shares of fuel cell manufacturer Bloom energy (NYSE:BE) were on the rise today, up 10.1% as of 1:00 PM ET.
There wasn’t too much company-specific news today. However, in last weekend’s edition, Bloom was highlighted as a top pick Barron’s Magazine as a stock poised to benefit from increasing energy demand due to the AI data center buildout.
Now potentially considered a prized ‘AI beneficiary,’ Bloom’s stock rises days after the article and a day before the AI chip juggernaut Nvidiatomorrow’s earnings report.
Bloom’s innovative fuel cell technology can help solve the missing energy problem
In the one from last weekend BarronsStephen Byrd, head of clean technology research at Morgan Stanleyhighlighted Bloom as one of his top five energy stocks benefiting from the buildout of AI data centers.
The Barrons The roundtable focused on the increased demand for electricity from energy-hungry AI data centers. As a result, electricity demand in the US is expected to accelerate from flat levels, which has been the case for the past few decades, to growth of around 2%, given the needs of AI data centers and automotive electrification -industry.
Given that U.S. electricity generation is somewhat constrained by both the amount of installed clean energy capacity and the slow buildout of the next-generation electric grid, certain companies that can provide clean power from existing sources or grid-independent sources are therefore ready to benefit.
Byrd highlighted Bloom’s potential to secure large contracts with data center operators seeking grid-independent energy sources. Bloom’s fuel cell-based energy servers, about the size of refrigerators, feature a unique technology that can convert fuel into energy without combustion, using hydrogen or biogas for zero-carbon emissions, or natural gas, which has a 50% lower carbon emissions profile with Bloom’s servers compared to natural gas from the electricity grid.
But Bloom has in fact already formed partnerships with several high-profile cloud data center operators and major tech companies. The most recent deal was a power purchase agreement with Intelannounced on May 9, which will result in “the largest fuel cell-powered high-performance computing data center in Silicon Valley.”
Is Bloom a purchase?
Bloom may not seem like a star grower; last quarter, revenue actually fell 14.5% and the company had an adjusted (non-GAAP) operating loss of $30.7 million.
However, revenue could be lumpy given the nature of its hardware business. Even after a “weak” quarter, management still expects revenue between $1.4 billion and $1.6 billion this year, which would be up from $1.334 billion in 2023. Additionally, the company also sees adjusted operating income increase to a positive $75 million to $100 million by 2024.
That doesn’t make Bloom a cheap stock, as it still has a market cap of $3.3 billion after today’s surge. However, the company’s technology seems to be catching on with AI companies. That makes it a growth stock to keep an eye on.
Should You Invest $1,000 in Bloom Energy Now?
Consider the following before purchasing shares in Bloom Energy:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Bloom Energy wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $580,722!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns May 13, 2024
Billy Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool holds positions in and recommends Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 relying on Intel and short May 2024 $47 relying on Intel. The Motley Fool has a disclosure policy.
Why Bloom Energy Surged Today was originally published by The Motley Fool
