Bloom Energy Stock Surges 20% on AI Data Center Plans Amid Growing Demand for On-Site Power Solutions. Should You Buy Shares Now?

Bloom Energy's stock surged 20% to a new high after CEO KR Sridhar announced plans for additional power supply agreements for AI data centers. The company's fuel cell technology is in high demand for reliable on-site power solutions, with recent partnerships with Oracle and Equinix. Bloom reported a record Q2 revenue of $401 million, up 19.5% YoY, and achieved double-digit percentage margins in its service business for the first time ever.

Bloom Energy's (BE) stock surged over 20% last week, reaching an all-time intraday high of $47.21, following CEO KR Sridhar's announcement of additional power supply agreements for artificial intelligence (AI) data centers. The fuel cell technology provider, which has emerged as a beneficiary of the AI boom, has seen its stock price rise significantly due to the growing demand for reliable on-site power solutions [1].

The company's recent partnership with Oracle (ORCL) and other major data center developers, such as Equinix (EQIX) and American Electric Power (AEP), highlights the increasing need for rapid and cost-efficient power solutions in the data center industry. Bloom Energy's ability to deliver on-site power for an entire data center within 90 days has positioned it as a key player in the AI infrastructure growth market [1].

Bloom Energy's impressive second-quarter earnings results further underscore the potential of its AI data center strategy. The company reported a record Q2 revenue of $401 million, up 19.5% year-over-year (YoY), while gross margins expanded to 28.2% from 21.8% in the prior year period. The operating income of $28.6 million in Q2 was a significant improvement over the $3.2 million reported in the year-ago period [1].

The company's service business has now been profitable for six consecutive quarters, achieving double-digit percentage margins for the first time ever. This consistency indicates improving reliability and operational efficiency that should appeal to mission-critical data center operators. CEO KR Sridhar emphasized during the earnings call that hyperscalers collectively will spend over $500 billion in capital expenditures in 2025, with at least $50 billion needed for power capital equipment. This represents demand equivalent to more than one nuclear power plant's worth of base load capacity every month, a market opportunity that traditional grid infrastructure cannot address at "AI speed" [1].

Analysts tracking Bloom Energy forecast revenue to rise from $1.47 billion in 2024 to $2.56 billion in 2027. In this period, adjusted earnings are forecast to expand from $0.28 per share to $1.31 per share. BE stock is currently priced at 78.5x forward earnings, higher than its one-year average of 47.4x. If the hydrogen stock can command a 50x forward earnings multiple, which is not too steep, it should trade around $65 over the next 12 months, indicating an upside potential of over 45% from current levels [1].

References:
[1] https://finance.yahoo.com/news/under-radar-hydrogen-stock-surging-201755008.html