Bloom Energy Stock Plunges Over 20%: Market Rout, DeepSeek Fears, and Mixed Analyst Views
Friday, Jan 31, 2025 2:55 pm ET
2min read Bloom Energy Corporation (NYSE: BE) shares experienced a significant decline this week, falling over 20% through 2 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence. The company's fourth-quarter earnings are not due until February 27, but a recent development rattled investors in the manufacturer of hydrogen fuel-cell systems. This article explores the specific factors contributing to the stock's decline and their relation to the company's fundamentals and market position.
Market Rout and Tech Sector Downturn
The broader market experienced a significant downturn, with technology stocks and AI-related companies taking a hit. Bloom Energy, being a tech company with a significant presence in the data center market, was not immune to this market-wide sell-off. This factor is evident in the statement: "Technology stocks and nearly every stock related to artificial intelligence (AI) tanked earlier this week..." (Source: S&P Global Market Intelligence)
DeepSeek's AI Model Release
The release of a low-cost AI model by Chinese AI startup DeepSeek rattled investors in the U.S. data center industry, as it posed a potential disruption to the AI landscape and data center industry. This fear impacted Bloom Energy stock, as the company's solid oxide fuel cell systems provide access to uninterrupted on-site power, which is critical for data centers. This factor is highlighted in the statement: "Investors fear DeepSeek could hit investments in the U.S. data center industry hard." (Source: S&P Global Market Intelligence)
Mixed Analyst Views
While some analysts have raised their price targets on Bloom Energy stock over the past couple of weeks, others are turning cautious. For instance, Piper Sandler analyst Kashy Harrison believes Bloom Energy is well-positioned to outperform, driven by demand from high-potential markets like data centers, and raised the stock's price target to $33 per share from $30 this week. On the other hand, analysts from Bank of America lowered their price target on Bloom Energy stock to $18 per share from $20 this week, one day after the stock plunged by more than 25% in a single day amid a tech sector rout. This factor is evident in the statements: "Piper Sandler analyst Kashy Harrison... raised the stock's price target to $33 per share from $30 this week" and "analysts from Bank of America lowered their price target on Bloom Energy stock to $18 per share from $20 this week." (Source: S&P Global Market Intelligence)
In conclusion, the over 20% decline in Bloom Energy stock this week can be attributed to several specific factors, including the market rout and tech sector downturn, DeepSeek's AI model release, and mixed analyst views. Despite the decline, Bloom Energy's fundamentals remain strong, with the company projecting revenue worth $1.4 billion to $1.6 billion for 2024 versus a record $1.3 billion in 2023. Investors should monitor the company's progress, particularly its Q4 2024 earnings and management's comments on DeepSeek's potential impact on the AI data center industry, before making a decision on whether to invest in Bloom Energy stock.
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