Down 38% From Its High, Is Bloom Energy Stock a Buy?

Bloom Energy (NYSE: BE) has been one of the hottest energy stocks to own over the past 12 months, rising around 500% during that stretch. Many growth investors see tremendous potential for the business given the mammoth energy needs of data centers, making it a compelling option for artificial intelligence (AI) investors seeking to profit from the tech build-out.

Shares of Bloom, however, have been coming under pressure in recent months, giving back some gains as broader market conditions are impacting many tech-related investments. On Monday, the energy stock closed at around $218 -- down 38% from its 52-week high of more than $351. Is now a good time to buy it?

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Bloom Energy's business is booming

Last week, Bloom Energy reported its second-quarter earnings for the three-month period ending June 30. It was a tremendous performance for the energy company, whose revenue totaled just over $1 billion, representing a 166% year-over-year increase. On top of that, it raised its full-year guidance, now expecting revenue to be in the range of $3.9 billion to $4.2 billion, which, at the midpoint, translates to a 100% growth rate.

Bloom's CEO, KR Sridhar, says that demand "keeps accelerating every quarter" and that "Bloom is now a standard for AI onsite power." The company's solid oxide fuel cell systems can be relied on to deliver continuous electricity, making them extremely valuable for data centers. Bloom has been capitalizing on those needs as its business has taken off.

Does the pullback in Bloom's price present a great buying opportunity for investors?

Bloom's business is experiencing significant growth and is profitable, reporting $196 million in net income this past quarter, representing a solid margin of around 18%, and a big improvement from a year ago when it incurred a loss of $43 million. Its top and bottom lines have been progressing well, and if its earnings continue to improve, its valuation should look much more attractive in the future, as the big concern with Bloom is that, given its significant run-up in value, it isn't a cheap stock to own -- it trades at around 80 times its projected future earnings (based on analyst expectations).

At that kind of valuation, there's virtually no margin of safety for investors if things go awry and tech companies pull back on data center spending and investment. However, for investors willing to take on the risk and uncertainty associated with AI-related stocks, Bloom could be a compelling long-term option to consider right now.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bloom Energy. The Motley Fool has a disclosure policy.