Bloom Energy (BE) Battles AI Headwinds Amid Tariff Turmoil

The energy transition is no longer just about solar panels and wind turbines—it’s now deeply intertwined with artificial intelligence (AI) and geopolitical trade dynamics. For bloom energy (NYSE: BE), a leader in distributed energy generation and hydrogen production, 2025 has become a proving ground for its ability to navigate twin challenges: tariff-induced cost pressures and shifting demand from AI-driven data centers. Here’s what investors need to know.

Tariff Turmoil: Steel Costs and Regulatory Headwinds

Bloom Energy’s core business—solid oxide fuel cells—relies heavily on steel for manufacturing. However, U.S. tariffs on imported steel have created significant headwinds. In early 2025, a 25% tariff on imported steel components led to an 18–22% increase in raw material costs, per regulatory filings. While the company secured a California Energy Commission waiver to source domestic steel (avoiding tariffs), this requires renegotiating supplier contracts and investing in U.S. partnerships by Q4 2025.

The regulatory front is equally fraught. In April 2025, the California Public Utilities Commission (CPUC) denied Bloom’s request to delay compliance with stricter greenhouse gas (GHG) standards for its net energy metering (NEM) tariff. This forces the company to align its products with updated environmental policies, adding operational complexity.

BE’s stock has declined 23.7% YTD in 2025, reflecting market skepticism about its ability to manage tariff-driven costs.

AI Headwinds: Demand Volatility and Competitive Pressures

While AI is driving explosive growth in data center capacity—projected to reach 55 GW in the U.S. by 2030—Bloom faces near-term demand shocks. Data centers, now prioritizing onsite power solutions to avoid grid bottlenecks, have become a key market for Bloom’s fuel cells. However, two factors complicate this opportunity:

1. Grid Interconnection Delays: U.S. grid upgrades are moving at a snail’s pace, with capacity expansion projected to take 80 years at current rates. While this benefits Bloom’s onsite solutions, delays in data center deployments could slow near-term demand.
2. Competitor Advancements: Rival energy providers are racing to meet AI’s power needs. Utilities like American Electric Power (AEP) are partnering with Bloom, but traditional grid infrastructure and emerging battery storage technologies threaten to erode its edge.

Bloom’s partnership with Equinix—a decade-long collaboration that scaled from 1 MW to 100 MW across 19 data centers—highlights its competitive strengths. Yet, its $2.5 billion fuel cell backlog and $9 billion service backlog (from 10–20 year contracts) suggest strong demand resilience.

Q4 2024 revenue hit $572.4 million, a 12.8% beat, but 2025 guidance ($1.65–$1.85 billion) hinges on project execution amid tariff and regulatory hurdles.

Strategic Responses: Tech Innovation and Partnerships

Bloom is countering these headwinds with aggressive innovation:
- Carbon Capture Integration: A partnership with Chart Industries enables its fuel cells to capture CO₂ emissions, positioning it as a low-carbon solution for hyperscalers.
- Supercapacitor Technology: These systems can respond to AI-driven load swings (e.g., 50% fluctuations within minutes) in milliseconds, outperforming traditional peaker plants.
- Utility Partnerships: The 1 GW deal with AEP (100 MW to be deployed in 2025) underscores its role as a grid complement, not a competitor.

Conclusion: A High-Risk, High-Reward Play

Bloom Energy is a microcosm of the energy transition’s complexities. On one hand, its $2.5 billion fuel cell backlog and carbon capture advancements position it to capitalize on AI’s power demands. Its 30% adoption target for onsite power by 2030 aligns with industry trends, and its service contracts provide steady revenue.

Yet, risks loom large. Steel tariffs could squeeze margins further, while grid delays and competitive threats from utilities or battery providers may limit growth. Analysts like Truist’s Jordan Levy remain cautious, citing a Hold rating and a $19 price target—40% below its 2025 peak.

Investors should weigh two truths:
1. Long-Term Promise: Bloom’s tech is critical for decarbonizing data centers, a $55 billion opportunity by 2030.
2. Near-Term Uncertainty: Tariff volatility and project execution risks cloud 2025’s outlook.

For now, BE is a speculative bet on the energy transition’s winners. While its innovations are compelling, the path to profitability in 2025 remains fraught with geopolitical and macroeconomic turbulence.

With AI driving 55 GW of additional capacity by 2030, Bloom’s success hinges on execution—but the prize is enormous.