Prediction: Why Buying Brookfield Renewable Instead of Bloom Energy Could Set You Up For Life

The rapid growth of artificial intelligence (AI) has strained the power grid. Rising electricity prices have led communities to push back against the construction of new AI data centers. Since AI can't "live" without a reliable power source, the technology industry has a big problem on its hands. Bloom Energy (NYSE: BE) is well-positioned to help solve the power problem.

But don't rush out and buy Bloom Energy's stock. You might be better off with Brookfield Renewable Partners (NYSE: BEP) instead. Here's why this high-yield partnership could set you up for life.

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Bloom Energy has a timely solution

Bloom Energy makes hydrogen fuel cells. It is an interesting technology on two fronts. First, it is clean because it doesn't produce greenhouse gases. Second, the fuel cells are made in a factory and can be delivered wherever they are needed, providing on-site power. It can be quicker and easier to build and deliver a fuel cell to a new AI data center than to obtain a grid connection.

That's why Bloom Energy's product backlog rose 2.5x year over year to $6 billion at the start of 2026. But that's just the start of the story, because each new fuel cell comes along with a long-term service contract. The revenue from those contracts expands the backlog to a whopping $20 billion. There are many reasons to like Bloom Energy's story.

The problem is that the stock has risen roughly 1,000% over just the past year. It's very clear that investors are aware of the opportunity. That's not to suggest the stock can't go higher, but the price-to-sales ratio is lofty at 29x. Most investors will probably be better off with a different AI power play.

Brookfield Renewable is built for the long term

Brookfield Renewable owns a globally diversified portfolio of clean energy assets. The diversification it provides is extensive, spanning hydroelectric, solar, wind, storage, and nuclear. Geographically, it operates in North America, South America, Europe, and Asia. But the real linchpin here is that Brookfield Renewable is also serving AI data centers, having inked notable supply contracts with Google and Microsoft (NASDAQ: MSFT).

The power contracts that Brookfield Renewable signs are generally long-term, so the income it generates is highly reliable. Which is what supports the stock's lofty 4.6% yield. The distribution has grown at an annualized rate of 5% over the past decade, in line with the long-term target of 5% to 9% annual distribution growth.

Brookfield Renewable actively manages its portfolio, so it is always buying and selling assets. However, the approach's long-term success is pretty clear from the steady growth of the distribution. If you are an income investor, Brookfield Renewable's lofty yield and reliable distribution growth will make it an appealing long-term holding. But what's also notable here is the valuation, since the price-to-sales ratio is 1.5x. That's in line with the five-year average, so it wouldn't be fair to suggest that the partnership is "cheap" today. But compared to Bloom Energy, it looks like a bargain.

Bloom Energy is a growth stock, Brookfield Renewable is a reliable tortoise

In reality, Bloom Energy and Brookfield Renewable Partners are likely to attract two different types of investors. Bloom Energy is a growth stock, Brookfield Renewable is an income stock. However, of the two, Brookfield Renewable's reliable, growing distribution can set you up for a lifetime of income while still giving you direct exposure to the AI sector. And you'll benefit from diversification beyond AI and across multiple power platforms.

Bloom Energy is an all-in bet on fuel cells, and the AI story is the main factor driving its stock higher right now. If either of those pieces of the story crumbles, the stock could pull back dramatically. For many investors, including those not focused on income, Brookfield Renewable is likely to be the better choice.

Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool has positions in and recommends Bloom Energy and Microsoft. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.