I'm Not Selling My Bloom Energy Shares, Even After This Run
Key Points
Bloom Energy's stock has surged, driven by increasing demand for on-site power solutions for data centers.
The company's solid-oxide fuel cells can deliver power in as little as two months, significantly faster than traditional power infrastructure.
Bloom Energy generated $1 billion in revenue for the first time in the second quarter, and analysts project strong growth ahead.
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Bloom Energy (NYSE: BE) stock has blasted higher, gaining 2,100% since November 2024. The company is riding the wave higher as hyperscalers secure reliable, on-site power for their rapidly expanding data center footprints.
Bloom Energy solves a key pain point by quickly bringing energy to these power-intensive data centers and has scored several major deals with technology companies in recent years. But despite the stock's big run-up and lofty valuation, I'm not selling my shares in Bloom Energy. Here's why.
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Bloom Energy has a major "time to power" advantage
Traditional power grids are struggling to keep up with the scale of the data center build-out. Data centers could be built in a couple of years, but the power infrastructure, including high-voltage transmission lines and power generation facilities, can take five to 10 years to build.
This kind of waiting time for power could cost hyperscalers billions. According to Bloom Energy chairman and CEO K.R. Sridhar, a full-stack AI provider operating a 1-gigawatt (GW) data center could earn between $12 billion and $24 billion in annual revenue.
Image source: The Motley Fool.
Bloom's solid-oxide fuel cells can deliver power in as little as two months -- giving it a major "time to power" advantage for data center developers.
Analysts project strong growth thanks to stout demand
Bloom Energy is priced at a lofty 164 times last year's earnings. However, the company is firing on all cylinders, generating $1 billion in revenue for the first time in the second quarter while customers continue to place large, long-term commitments for its fuel cells.
That said, analysts project earnings per share to grow 250% year over year this year and another 83% in 2027. Given its rapid growth, long-term commitments, and time-to-power advantage, Bloom Energy is a top AI pick-and-shovel stock I don't plan on selling anytime soon.
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Courtney Carlsen has positions in Bloom Energy. The Motley Fool has positions in and recommends Bloom Energy. The Motley Fool has a disclosure policy.
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