Bloom Energy Is Up 497% Over the Past Year. Is It Too Late to Buy?

Over the past year, Bloom Energy (NYSE: BE) stock has surged 497%. The company is a bridge energy provider to help data centers meet their growing energy needs, and it has benefited from several major deals with hyperscalers and utility providers for its solid oxide fuel cells.

It recently reported excellent fourth-quarter results, but with the stock up so much, is it too late to buy? Let's look at the opportunity ahead.

How Bloom Energy quickly meets hyperscalers' growing power needs

Artificial intelligence has taken the world by storm, and the momentum isn't stopping anytime soon. Major technology companies, including Amazon, Microsoft, Alphabet, and Meta Platforms, recently confirmed that they will continue to invest heavily in capital expenditures, with plans to spend $625 billion this year alone for data center footprints and other expansion projects. This is where Bloom Energy's opportunity lies.

The U.S. power grid faces a projected deficit of nearly 100 gigawatts (GW) of capacity over the next five years, according to U.S. Energy Secretary Chris Wright. Bloom's solid oxide fuel cells not only provide backup power, but can be a time-to-power solution that bypasses the multi-year utility power grid and interconnection build-out.

In the fourth quarter, the company's product backlog surged 2.5 times to $6 billion, and its total backlog, including services, rose to $20 billion. One driver of this impressive growth is a $5 billion strategic partnership with Brookfield Asset Management. This enables Bloom to deploy energy-as-a-service across Brookfield's trillion-dollar infrastructure portfolio, which includes 140 data centers, industrial factories, and other real estate.

Image source: Getty Images.

What makes Bloom's solid oxide fuel cells appealing is that they can deliver their product in a fraction of the time that it takes to scale up the power grid. The company delivered to Oracle in just 55 days, crushing its 90-day promise. Bloom is also ramping up production and expects to double its capacity from 1 GW to 2 GW by the end of 2026. Thanks to the strong demand, Bloom raised its 2026 revenue guidance from $3.1 billion to $3.3 billion.

Investors are paying up for growth

Bloom Energy is up significantly over the past year and trades at an expensive valuation. Analysts covering the stock project it to earn $1.38 per share (EPS) this year, putting its valuation at 107 times this year's projected earnings based on the most recent share price. Analysts are projecting strong growth over the next two years, forecasting EPS of $2.92 in 2027 and $4.58 in 2028.

The lofty valuation makes it vulnerable to large swings, so the stock is best left to investors who can stomach the risk. That said, it will take years for utilities to bring new power grids and infrastructure online, and Bloom Energy should continue to benefit from tailwinds for its product until then.

Courtney Carlsen has positions in Alphabet, Bloom Energy, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Bloom Energy, Brookfield Asset Management, Meta Platforms, Microsoft, and Oracle. The Motley Fool has a disclosure policy.