Why Bloom Energy Stock Powered Higher Today
Key Points
Brookfield Asset Management will invest $5 billion in Bloom Energy.
The two companies are forming a partnership to help build and power AI data centers.
Bloom Energy stock costs more than 1,000 times trailing earnings.
- 10 stocks we like better than Bloom Energy ›
Shares of Bloom Energy (NYSE: BE), a pioneer in hydrogen fuel cells for off-grid and backup power, soared 22% at the open Monday after the company announced a $5 billion "strategic AI infrastructure partnership" with giant Brookfield Asset Management (NYSE: BAM).
Yes, you read that right. Bloom Energy is an artificial intelligence company now.
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Image source: Bloom Energy.
Brookfield + Bloom: Better together
In the "first phase" (meaning there will probably be more phases) of this "joint vision to build AI factories capable of meeting the growing compute and power demands of artificial intelligence," Brookfield will invest up to $5 billion to deploy Bloom fuel cells to power AI data centers in the United States and Europe, and later, "globally."
Bloom CEO KR Sridhar says "AI factories demand massive power, rapid deployment and real-time load responsiveness that legacy grids cannot support" -- and for which off-grid fuel cell boxes from Bloom could be ideal.
Is Bloom Energy stock a buy?
In contrast to perhaps higher-profile fuel cell stocks such as Plug Power and FuelCell Energy, Bloom is a fuel cell operator that's already earning profits (albeit only $24 million over the last 12 months), and positive free cash flow as well ($44 million).
At $24 billion in market cap, the stock may not look like much of a bargain; Bloom's P/E ratio is literally more than 1,000! Brookfield seems to think Bloom stock is enough of a sure thing, however, that it's willing to buy more than 20% of the company. Most analysts polled by S&P Global Market Intelligence agree Bloom will be solidly profitable next year, growing earnings past $5 per share by 2030.
That's still 21x projected earnings five years out, however. And Bloom is still a sell for me.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.
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