The Dip Is Here for Bloom Energy. Here's Whether to Buy It or Walk Away.

After a run for the ages, Bloom Energy (NYSE: BE) stock has taken a plunge. Year to date, Bloom stock has more than doubled. But a few days after announcing its landmark $25 billion agreement with Brookfield Asset Management (NYSE: BAM), the stock hit turbulence. General market volatility and a short-seller report have weighed on the stock.

The stock trades almost 30% lower from its 52-week high. For investors watching Bloom, that begs the question -- is now the buying opportunity you've been waiting for, or should you wait this one out?

Demand for Bloom servers is booming -- can it keep up?

In a nutshell, Bloom makes modular boxes that lets customers, like data centers, generate electricity on their own site instead of waiting years to connect to the grid.

These boxes, also called Bloom servers, are highly relevant right now. AI data centers need a lot of power; they need it fast, and traditional utilities are struggling to keep up. Bloom says it can deploy its servers to a customer within 90 days, and it backed this promise up last year when it delivered fully operational fuel cell systems to Oracle within 55 days.

Demand for Bloom's products has never been stronger, and its revenue growth is proof. First-quarter product revenue reached $653 million, a roughly 208% increase compared to about $212 million last year. The company has raised full-year revenue guidance to between $3.4 billion and $3.8 billion, which would represent about 68% to 88% growth from the roughly $2 billion it generated in 2025.

Image source: Bloom Energy.

To compete in the most power-hungry markets, however, Bloom will need to expand its manufacturing capacity. Last year, its annual production reached about 1 gigawatt (GW), which it claims will double to 2 gigawatts (GW) by the end of this year. That's fine progress, but it's still only a fraction of the roughly 150 GW of AI data center power demand that Bloom expects in the U.S. over the next several years.

Should you buy the dip on Bloom?

Even after its recent dip, Bloom stock still sells at a pricey valuation. The company carries a $73 billion market capitalization, and the stock trades at roughly 28 times sales, which is several times higher than the average for green and renewable energy companies (about 3.75).

But when you look at Bloom's growth trajectory, it's easy to understand why investors are willing to pay a premium. The company has a $20 billion backlog and a $25 billion financing agreement with Brookfield Asset Management. Over the next two fiscal years, revenue is projected to grow fivefold.

Data by YCharts

The company still faces risks, and it needs to increase its manufacturing capacity if it wants to execute on its growth promises. Still, for those who can withstand the short-term volatility, buying the dip on Bloom could prove fruitful over the long run.

Steven Porrello has positions in Bloom Energy. The Motley Fool has positions in and recommends Bloom Energy, Brookfield Asset Management, and Oracle. The Motley Fool has a disclosure policy.