Why Plug Power Stock Surged 26% in May But Is Falling Apart Again

May was a significant month for Plug Power (NASDAQ: PLUG) as the hydrogen fuel-cell maker achieved something investors have been waiting to see for several years: its first glimpse of profitability. Shares surged after earnings, ending the month up 26.2%, according to data provided by S&P Global Market Intelligence. Although Plug Power has cooled off since then and given up much of those May gains, the stock is still up roughly 60% for the year, as of this writing.

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Better margins, bigger hopes

Plug Power has been in business for more than 25 years, but it reported its first-ever gross profit for the fourth quarter of 2025 only in March 2026. Its first-quarter earnings report in May solidified the narrative.

Plug Power's revenue rose 22% year over year in Q1, driven by electrolyzer and material handling strong volumes. Its gross margin improved dramatically, swinging from a brutal negative 55% in Q1 2025 to negative 13% in Q1 2026.

This margin recovery is linked to Project Quantum Leap, Plug's aggressive cost-cutting and consolidation strategy. At the same time, Plug Power's vertical integration is starting to pay off. The company has started producing green hydrogen in-house and cut down third-party purchases to nearly 50%. That boosted its fuel margin by nearly 54 percentage points in Q1.

Although Plug reported a gross loss, two back-to-back quarters of margin improvement attracted multiple analyst upgrades. Analysts from both Craig-Hallum and B. Riley, for instance, raised their price targets on Plug Power stock to $5 per share each.

Is Plug Power stock a buy now?

Plug Power expects to achieve a positive earnings before interest, taxes, depreciation, and amortization (EBITDA) run rate in 2026, positive operating income in 2027, and full profitability in 2028.

While highly ambitious, hitting these milestones would be a massive catalyst for the stock. That's because achieving net profitability would finally shift Plug Power's narrative from a speculative gamble to a profitable, execution-focused company.

However, the path forward won't be easy. Plug Power is still burning cash and continues to look for ways to raise more money to run its operations and fund growth. Also, the real test lies in consistency. A single turnaround quarter is a great start, but stringing together profitable years is the true challenge. To win over skeptical, long-term investors, Plug Power must prove that it can break old habits of project delays and inconsistent delivery and make operational discipline the new normal. Until then, the stock will remain a speculative, volatile trade.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.