Artificial intelligence (AI) has turned electricity into one of the hottest commodities on the market. And Bloom Energy (NYSE: BE), Wall Street’s favorite fuel cell manufacturer, is right there capitalizing on the trend.
Bloom Energy’s fuel cell systems — big, box-shaped power generators — convert fuel, like natural gas, straight into electricity without relying on combustion. Rather than delivering electricity through miles of transmission lines, as traditional utilities do, Bloom’s energy servers can generate power on-site — precisely what AI data centers need most.
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Bloom’s impressive revenue growth has shown up in its stock performance: At the time of writing (June 30), Bloom has grown about 194% since the start of the year, and over 1,100% from last year.
Of course, when a stock rises that much in such a short period, the question is inevitably raised: Has the opportunity been missed? Is it too late to buy Bloom?
AI’s biggest bottleneck is Bloom’s biggest boon
Artificial intelligence, though widely anticipated to become the most transformative technology of this century, is not a done deal yet. Indeed, its explosive pace of improvement — just four years ago, ChatGPT hadn’t even been released — faces several concerning bottlenecks, not the least of which is the lifeblood that makes it “think” at all: energy.
By 2028, the U.S. could face a 19-gigawatt (GW) power shortfall, according to Antonio Neri, CEO of Hewlett Packard Enterprise. That’s enough electricity, Neri points out, to power 60 million homes. Meanwhile, data centers are expected to make up nearly half of the growth of U.S. electricity demand through 2030.
Image source: Bloom Energy.
The mismatch between expected power demands and current generation capacity is one of the principal reasons behind Bloom’s flourishing. It’s simply much easier to build a power plant in a box than connect to the electric grid. It’s also faster: It can take several years to build adequate generation and transmission lines to supply new power to data centers. Bloom can deploy its servers within three months.
Unsurprisingly, revenue for Bloom is coming in from sales of these Bloom boxes. Its first-quarter product revenue — which consists primarily of selling its energy servers — tripled year over year. Bloom has other businesses, too, like ongoing maintenance and electricity sales, which could become important down the road as recurring revenue. But its product sales are, right now, the cream of the crop.