Could Plug Power Become the Next Bloom Energy?

Hyperscalers are spending massive amounts of capital to build out data centers for artificial intelligence. This historic build-out has triggered a once-in-a-lifetime capital expenditure supercycle, creating wealth for companies that can meet the many needs of these data centers.

One thing that these data centers really need is energy, and Bloom Energy's (NYSE: BE) solid-oxide fuel cell technology has emerged as a big winner as hyperscalers look to generate their own energy and ensure reliable operations without putting excessive strain on the power grid.

Another company that could capitalize on growing power demand is Plug Power (NASDAQ: PLUG), which offers hydrogen-powered fuel cells that provide zero-emission power to address energy shortages while helping companies meet sustainability goals. Could it become the next Bloom Energy?

How Plug Power could address data centers' growing energy needs

Bloom Energy has established itself as a top player in stationary power with its solid-oxide fuel cells, which can run on a variety of fuels, including natural gas, hydrogen, and biogas. What makes it appealing to top hyperscalers is that it can quickly deliver reliable on-site baseload power within a couple of months, not years. In recent years, Bloom has scored massive deals with hyperscalers and related infrastructure builders, including Oracle, Brookfield Asset Management, and American Electric Power.

Plug Power's focus over the past few decades has been on building an end-to-end green hydrogen ecosystem, including electrolyzers, green hydrogen plants, hydrogen storage, and transportation. The company offers several products and services, and one of its primary offerings is warehouse equipment for Amazon and Walmart, including hydrogen-powered forklifts and other heavy-duty warehouse equipment.

While Plug Power has focused on the hydrogen ecosystem, the company sees a massive opportunity in data centers ahead. It offers proton exchange membrane (PEM) fuel cells, which could provide zero-emission backup power. The company has its GenSure HP Platforms, which scale from 500 kilowatts to 1.5 megawatts and could be combined to support large data centers.

While the opportunity exists, the biggest issue right now is that its PEM fuel cells run on pure hydrogen. To get around this bottleneck, Plug must pair its fuel cells with electrolyzers, enabling data centers and other industrial operators to generate hydrogen on-site. Without these on-site electrolyzers, Plug Power faces an uphill battle, as the hydrogen fuel supply chain is still far from established.

Image source: Plug Power.

Plug Power needs to prove itself

Bloom Energy stock has surged as the company has grown into a serious player in providing energy to hyperscalers. The company demonstrated the timeliness of its technology last year when it delivered an operational fuel cell system to Oracle in just 55 days, well ahead of the 90-day commitment. Bloom Energy is also ramping up its manufacturing capacity to meet this growing demand.

For Plug Power to accomplish this, it needs to secure hyperscaler customers for both its fuel cells and electrolyzers to effectively utilize hydrogen power. Because the hydrogen fuel supply chain isn't built out, on-site electrolyzers are a must for Plug Power. That said, the company has posted a net loss every single year since going public in 1999. Investors are best off waiting to see if it can secure binding deals with hyperscalers before buying the stock.

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