I Want Exposure to the AI Boom Without Buying Nvidia. Here's Why Bloom Energy Is My Pick.

Nvidia (NASDAQ: NVDA) has been one of the early leaders in capitalizing on the AI boom. The semiconductor giant is currently the largest company by market cap at over $5 trillion. While Nvidia is still growing briskly, -- its revenue surged 85% in its fiscal 2027 first quarter to $81.6 billion -- it could face headwinds to future growth. It's facing increasing competition, including from its customers, many of whom are developing their own AI chips.

However, I still want exposure to the AI boom without the risks of buying Nvidia at its current level. My pick is Bloom Energy (NYSE: BE). Here's why I prefer it over Nvidia right now.

Image source: Getty Images.

The Nvidia of data center power

AI chips like those developed by Nvidia require a massive amount of power to run at full capacity and prevent overheating. As a result, data centers need access to large amounts of stable electricity. Power is becoming a huge bottleneck for data center development.

It's a problem that Bloom Energy is solving. The company's advanced fuel cells provide an ultra-reliable, clean, and scalable on-site power solution. Data center developers can quickly deploy Bloom's fuel cells, enabling them to build out AI infrastructure more rapidly.

Bloom Energy is quickly becoming as vital to AI as Nvidia's chips. Last year, it collaborated with Oracle (NYSE: ORCL) to deliver onsite power to its data centers within 90 days. The initial deployment was so successful (just 55 days to deploy) that Oracle expanded its strategic partnership with Bloom Energy to deploy up to 2.8 gigawatts (GW) of its fuel cells earlier this year to accelerate its AI infrastructure build-out.

The company also formed a strategic partnership with leading global alternative investment manager Brookfield Asset Management (NYSE: BAM) last year. Brookfield initially planned to invest up to $5 billion in deploying Bloom's advanced fuel cell technology at AI factories. That investment helped seed the inaugural Brookfield AI Infrastructure Fund, which features Nvidia as a cornerstone investor and aims to invest up to $100 billion in acquiring AI Infrastructure. Brookfield recently expanded that partnership fivefold to $25 billion. It's part of Brookfield's strategy to advance a new model for data centers that integrates power, compute, data center infrastructure, and capital.

Only scratching the surface of the opportunity

Foundational models and generative AI will drive powerful electricity demand in the coming decade. Forecasters anticipate that AI data centers in the U.S. alone could surpass 100 GW by 2035. That's a massive opportunity for Bloom, especially as more companies turn to on-site solutions to power their data centers. In its recently published annual Data Center Power Report, Bloom found that 61% of developers plan to bring their own power if the grid can't meet their needs.

While Bloom isn't the only fuel cell maker vying for the data center market, no other company can match its scale and financial resources. Many of its peers are still losing money. Bloom Energy, on the other hand, is increasingly profitable. Its revenue rocketed 130% in the first quarter to $751.1 million, while its operating income jumped $91.2 million to $72.2 million. The company is also generating positive operating cash flow ($73.6 million in the first quarter). That's giving it the funds to reinvest in expanding its capacity. It also has the backing of Brookfield's $25 billion strategic partnership.

Not quite as expensive

Surging demand for Bloom's fuel cells has catapulted its stock, which has skyrocketed nearly 750% in the past year. While I missed that rally, I still think Bloom has plenty of room to continue growing shareholder value. Its stock price has cooled off a bit from the peak (down more than 35%), giving it a slightly more reasonable valuation of around 16 times forward sales at its current $62 billion market cap. Given its recently expanded strategic partnerships, I expect Bloom's revenue to continue growing briskly in the coming years. Even though I'd prefer to buy Bloom even lower, I also don't want to miss out on its high-powered growth potential. That's why I plan to buy some shares in the very near future and add if it gets cheaper.

Matt DiLallo has positions in Brookfield Asset Management and has the following options: short August 2026 $150 puts on Bloom Energy. The Motley Fool has positions in and recommends Bloom Energy, Brookfield Asset Management, Nvidia, and Oracle. The Motley Fool has a disclosure policy.