Bloom Energy Says It's Now "The Standard for AI Onsite Power." Here's What That Means for the Stock.

Investors should take any publicly traded company's self-congratulating comments with a grain of salt. Such cheerleading is usually just an attempt to cast a more bullish light on its stock.

Just because a statement has a self-serving agenda, however, doesn't mean it's inaccurate.

It's an issue that current or prospective Bloom Energy (NYSE: BE) shareholders are wrestling with right now. Within its recent Q2 report, CEO KR Sridhar said, "Today, all the major U.S. hyperscalers and over a dozen U.S. neoclouds, AI labs, and colocation data center operators have validated and approved our power solutions for their AI factories." His conclusion? "Bloom is now a standard for AI onsite power." Maybe it is. Revenue grew 165.5% year over year to $1.06 billion during the three months in question, after all.

The question is, what might it mean for Bloom's stock?

But first things first.

Bloom Energy is in the right business at the right time

Simply put, Bloom is mainstreaming a new way of producing electricity when and where it's needed. In contrast with combustion-powered generators or natural gas-powered turbines, Bloom Energy makes and markets so-called fuel cells that convert a gas -- usually hydrogen -- directly into electricity using an electrochemical rather than a mechanical process. The key is the catalytic material found within the equipment itself.

Image source: Getty Images.

Even by fuel cell standards, however, Bloom Energy is a standout. Its solid oxide fuel cell technology is capable of converting hydrogen, natural gas, or even biogas into electricity, providing facilities of all sizes (including artificial intelligence data centers) the flexibility their owners want when taking power production into their own hands.

It's working too. Plenty of institutions are buying Bloom's tech, including Oracle for its AI data centers. In April, the technology giant more than doubled the amount of electricity it asked of Bloom Energy, from 1.2 gigawatts to 2.8 gigawatts.

This is still just the beginning, too. Now that the tech is proving a viable alternative to more mainstream options, industry research outfit Technavio expects the worldwide fuel cell market to grow at an average annualized pace of nearly 40% between now and 2030.

Not actually the standard, but certainly mainstream enough

But are Bloom's solutions truly "the Standard for AI Onsite Power?" Not quite.

Although it's clearly increasingly popular, globally, the International Energy Administration reports coal and conventional use of natural gas (burning it to spin power turbines) remain the top two power sources for the world's AI data centers, and even the two of them combined only account for a little over half of the electricity these facilities consume. Natural gas is proving to be an increasingly popular option within the United States, though, which is the world's single-biggest operator of AI data centers, and where Bloom is located and therefore well positioned to serve.

As for what it means for the stock, despite this ticker's subpar performance since mid-June, the analyst community arguably has this one right. Their consensus 12-month target of $279.07 is 30% above the stock's present price.

The near-tripling of per-share earnings that analysts expect between this year and 2028, however, also makes this ticker an undervalued longer-term prospect even if its solid oxide fuel cells aren't actually the AI industry's new overarching standard for onsite power.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bloom Energy and Oracle. The Motley Fool has a disclosure policy.