Key Points
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Bloom Energy makes solid oxide fuel-cell systems.
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Demand for Bloom’s servers has skyrocketed, with data center clients leading the charge.
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A $10,000 investment today is unlikely to grow into a million, unless Bloom becomes one of the most valuable companies in the world.
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Bloom Energy (NYSE: BE) is an energy company that sells solid oxide fuel-cell systems for on-site power generation. Put differently: Bloom deploys boxes (“energy servers”) that let power-hungry customers, like data centers, generate electricity at their own locations rather than waiting years to connect to the grid.
Over the last year, Bloom stock has staged a blistering rally, with a 1,100% gain since last year and an over 250% gain year to date. The breathtaking run has been fueled by explosive revenue growth and a flurry of partnerships that have crystallized Bloom’s emerging role as an AI power-enabler.
Bloom’s rise to power has been impressive, and has rewarded long-term Bloom investors generously. But does it have enough growth left to mint new millionaires?
Bloom stock is on fire, but minting new millionaires from today’s price is unlikely
First, let’s look at the math.
A $10,000 investment in Bloom at today’s price would need a hundredfold gain to become $1 million. At the time of writing (July 1), Bloom trades for about $309 a pop. That means Bloom would need to trade for around $30,900 per share, implying a market cap of between $8 trillion to $9 trillion, or roughly twice the size of Nvidia (NASDAQ: NVDA) today.
So, no, Bloom probably won’t mint new millionaires at today’s price. Is it still a buy after its recent momentous run?
Demand for Bloom’s energy servers is growing, but read the fine print
The bull case for Bloom is growing stronger. Indeed, just yesterday (June 30), the company expanded its AI-infrastructure relationship with Brookfield Asset Management (NYSE: BAM) from $5 billion to $25 billion. That comes roughly a month after Nebius (NASDAQ: NBIS) and Bloom became strategic partners, and two months after Bloom and Oracle (NYSE: ORCL) expanded their strategic partnership to 2.8 gigawatts (GW) of fuel-cell power capacity.
These deals signal that demand for Bloom’s fuel cells is real, and growing. However, I want to pause for a second on that first one (the Brookfield deal), because, though it brings value to Bloom’s business, it might not be what you think.
The important thing to notice is that this deal is a financing framework, not a purchase order. In other words, Brookfield is willing to finance up to $25 billion for AI power projects that will use Bloom’s energy servers. It’s not committing $25 billion in revenue to Bloom, as if it were buying $25 billion in Bloom fuel cells. It is only providing the capital for AI infrastructure projects, while Bloom will sell the power technology for it.
This still helps Bloom, of course. By covering the financing, Brookfield makes it easy for prospective customers to deploy Bloom’s fuel cells, which, in turn, creates the potential for more sales and long-term service revenue. To assume that the entire $25 billion deal will flow directly into Bloom as revenue would be a mistake.
Obviously, Bloom is an attractive energy stock right now because demand for its servers is clearly there. On the other hand, the path from demand to reported revenue is more complicated than meets the eye, due to the complexity of financing, as well as project timelines. As such, I’d approach Bloom with caution. The opportunity is clearly real, but after a 1,300% rally, near-perfect execution is needed to sustain the momentum.
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Steven Porrello has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bloom Energy, Brookfield Asset Management, Nvidia, and Oracle. The Motley Fool has a disclosure policy.
