Why Bloom Energy Stock Blasted Nearly 30% Higher Last Month

The future of the energy industry was firmly on the minds of American investors in June. The Big, Beautiful Bill championed by President Trump was making its way through Congress, and a series of its provisions concerned the sector. New proposals essentially favored certain types of energy production over others. Luckily for Bloom Energy (NYSE: BE), it was one of the beneficiaries.

That put it in a particularly advantageous position, as the U.S. will surely be coping with increased demand for energy sources in the years to come. It didn't come as a surprise, then, that an analyst reiterated his positive view of Bloom's future in a research note published near the start of the month.

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A pundit stays the course

The analyst in question was RBC Capital's Christopher Dendrinos, who is holding fast to his outperform (read: buy) recommendation and $26 per share price target for Bloom.

Dendrinos's position is based on that much-anticipated spike in demand for energy, according to reports. The analyst pointed out that the company has both short- and long-term opportunities presented by that rise, which to no small extent is due to the rapid emergence of artificial intelligence (AI) technology.

Bloom appears particularly well positioned for the Age of AI. Data centers designed for the technology need reliable sources of power that can be provided in significant volume and, ideally, are clean compared to other generation methods. The company's energy servers are quite suited for this work.

As the month went by, Bloom became more of an apparent winner with Trump's budget reconciliation bill. In the version that was ultimately passed by the Senate certain types of energy production would be affected by a change making it harder for them to obtain federal tax credits.

This applies to solar and wind projects, however, and not the natural gas or hydrogen offerings that are Bloom's specialties. In fact, the bill gives hydrogen energy developers an extension on federal tax credits, and generally supports the more traditional natural gas segment.

The Big, Beautiful Bill still has to pass a fresh vote in the House of Representatives. There are apparently some holdouts in Trump's Republican party in the chamber, so success is by no means assured -- it could face tough challenges as it did with senators.

Betting on the bill

Bloom's future depends rather heavily on the bill's ultimate fate. However, I think that even if the hydrogen/natural gas-favoring provisions in the final Senate version are reduced in some way those technologies would still be given advantages.

Meanwhile, the company is one of the younger and more innovative players in its industry, which is still dominated by fairly traditional power producers. I think that tech has real potential, and the latest moves by our nation's lawmakers are sure to give it at least something of a tailwind. It's a risky stock to own, but one that seems like a decent bet these days.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.