How the AI data center bubble story is playing out inside one booming energy stock

A million bubbles were swirling inside each glass of Champagne poured on New Year’s Eve — which seems about like the number of times artificial intelligence bubbles have been mentioned by tech investors, economists and media pundits in recent months.

Bubble fears surrounds stocks within the Magnificent 7 — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — as well as Oracle and Softbank and other tech companies’ multi-billion-dollar investments in the unrelenting buildout of humungous data centers to power their AI systems. Data centers are expected to require roughly $7 trillion in capital outlays by 2030, according to a report by McKinsey & Co. The bubble speculations rage almost daily as breaking news and earnings reports send Mag 7 stock prices rising and falling, leading analysts to constantly update their buy, sell or hold recommendations.

That’s essentially the 30,000-foot, macroeconomic view of AI from Wall Street’s bulls and bears. For a zoomed-in, micro look at the volatility surrounding AI, there may be no better example of adjacent players in the space than Bloom Energy.

A one-time privately funded startup darling from Silicon Valley’s initial push into renewable energy which grabbed some marquee customers early on (e.g. Google and Walmart), Bloom was often in the red since its founding in 2001. Following its 2018 IPO at a price of $15 per share, it has been an unremarkable stock, trading near that IPO price as recently as last April. But Bloom has skyrocketed roughly 400% over the past year, ignited by its emergence as a standalone, onsite power supplier for electricity-guzzling AI data centers. It uses stacks of solid oxide fuel cells to provide an immediate, always-on alternative to connecting to public utilities’ strained grids. Bloom is now among the priciest energy stocks, at 125 times forward earnings.

Bloom’s performance chart for 2025 resembles one depicting the elevation trajectory from flat, mile-high Denver west to 12,000-foot-high Rocky Mountain National Park. The stock price had come back down to Earth lately — from a 52-week high of $147.86 in November on the strength of strong third-quarter earnings and a major deal with utility giant American Electric Power. But it continues to fluctuate in reaction to good and bad news regarding its AI customers, with the latest boost coming on Thursday.

Bloom’s stock soared on Thursday and Friday with the news that a Wyoming data center project had won a key approval. The 1.8 GW facility is expected to include 900 MW of Bloom’s fuel cells, representing about $3 billion in revenue for the company in coming years, according to an analysis from Morgan Stanley’s David Arcaro. In a related development, AEP announced a $2.65 billion deal to acquire a substantial portion of Bloom’s fuel cells as part of a deal with an unnamed customer, presumably the same Wyoming data center. 

With the two-day spike, Bloom’s stock rose roughly 30% last week, closing over $134 on Friday with a valuation near $32 billion. 

Bloom’s profitability remains much more modest than its revenue or stock growth. On October 28, the company reported third-quarter revenue of $519 million, up 57% year over year. It posted a net profit of $7.8 million, compared to a $9.7 million loss a year earlier.

On Wall Street, the bulls have the upper hand over the bears in the narrative, and that has paid off handsomely for investors, but there are skeptics. Across the 26 analysts covering Bloom, five hold sell or strong sell ratings. The average price target of $115 per share — although below its current share price after last week’s rapid runup — remains well above bearish bets, such as Jefferies’ price target of $53.

San Jose-based Bloom has installed its proprietary fuel cells — which primarily run on liquid natural gas, but also biogas and hydrogen, resulting in lower emissions — at more than 1,200 facilities covering a swath of industries, including manufacturing, retail, health care, biotech and telecom, since 2008. In addition to Walmart and Google, initial customers included Google, Coca-Cola, Cox Enterprises, FedEx, and Staples.

In July 2024, CoreWeave, a cloud-computing company that has risen over 90% since its 2025 IPO and is often mentioned among AI stock bubble fears, became Bloom’s first AI data center partner, joined since by Oracle, Equinix and AEP.

At the dizzying rate that data centers are being built in the U.S., there’s no end in sight for electricity needed to power them.

“Bloom Energy has 1.5 gigawatts of fuel cells deployed globally,” said Aman Joshi, the company’s chief commercial officer, with more than 400 megawatts devoted to data centers. “Equinix, our flagship customer, has more than 100 megawatts deployed across 20 sites.”

Bloom is currently producing 1 GW of fuel cell capacity at its lone manufacturing facility in Fremont, California, Joshi said, and “we’ve publicly announced we are doing 2 gigawatts [by December 2026].”

There are nearly 3,800 data centers are in the U.S, according to Data Center Map, an industry resource for data center research. Through 2028, another 280 or so are expected to come online. The Bank of America Institute has reported that U.S. electricity demand is expected to grow 2.5% annually over the next decade, five times faster than the growth rate over the past decade.

AI stock valuations and the power sector

The sustainability of Bloom’s stock price will rely on continued revenue growth and improved profitability, but at a macro level, access to capital to scale up production of fuel cells, and ability to compete with other power providers — all of which are predicated on the continued surge in data center construction.

Bloom is expected to report its fourth quarter and full-year earnings for 2025 on Feb. 26.

Some analysts contend that the real bottleneck in the data center buildout is power, or as OpenAI CFO Sara Friar put it to CNBC last September, “The real bottleneck isn’t money. It’s power.”.

“The bubble AI companies are facing is going to be who has planned logistically to connect their facility to power infrastructure, and maybe even further downstream to fuel infrastructure for that power,” said Zachary Krause, an energy analyst at East Daley Analytics who covers the data center industry. “And that’s why I don’t think Bloom is on the bubble. Their business model is very strong right now.”

In addition to the lucrative deals Bloom signed with hyperscalers last year, in October it entered into a $5-billion strategic partnership with Brookfield Asset Management, the world’s largest AI infrastructure investor, to deploy Bloom’s fuel cell technology, with Bloom CEO KR Sridhar describing the company as “the preferred onsite provider for Brookfield’s trillion-dollar infrastructure portfolio” during its October earnings call. “Brookfield has invested $50 billion in AI opportunities and is tripling the size of its AI strategy over the next three years,” he said on the call.

The deal creates multiple benefits for Bloom, according to Oppenheimer analysts, including higher sales. The concentration of Bloom fuel cells will provide service efficiencies, the analysts wrote in a research note, while Brookfield can help provide financing for customers looking to lease fuel cells. “We expect all of these dynamics to support above-consensus sales growth and margin expansion,” they said.

Evercore analysts said that the joint venture confirms Bloom’s ability to be an essential player in the energy buildout to support AI. It underscores a key point for the industry, which is “speed to power is paramount,” they wrote.

While the most recent quarterly results came in above expectations, Wall Street bears have pointed to aggressive assumptions about the way these deals will play out in the years ahead. The rapid rise in shares in the latter part of this past week was similar in magnitude to what occurred after the Brookfield deal was announced. At that time, Bank of America analyst team, who have held a sell rating on Bloom Energy, said they see risk in a Street that is “assuming 5-yr perfection” and viewing these deals as a near-term earnings catalyst rather than as gradual deployments.

“A strategic win, yes — but the market is paying today for a decade of delivery,” Bank of America analysts wrote in an October research note. “Investors continue to treat Bloom’s major customer announcements as additive backlog rather than potential pipelines. … we view that as aggressive,” they wrote. Bank of America did raise its price target from $26 to $39 after the most recent earnings though it still rates the stock at a sell.

In late December, Bloom received another capital infusion, securing a $600-million multi-currency credit facility with Wells Fargo. It will permit cash withdrawn from the facility to finance capex, including international projects, such as in South Korea, where Bloom has a distribution agreement in place with SK Ecoplant.

With those capital resources, plus around $595 million in cash reserves as of September 30, Joshi foresees no financial constraints in scaling up to 2 GW this year. “Our fuel cells are printed,” he said, adding that “our raw material sources are extremely diversified. It’s just a matter of us [adding] one more printing line, which will take about $100-$150 million of investment.”

In fact, Bloom has been able to lower costs by about 10% every year, said UBS analyst Manav Gupta, “and they are very confident they can increase from these levels because, until now, the economies of scale have not kicked in.” The Fremont production facility can be expanded up to 5 GW of production capacity, he said, although “KR is the kind of person who will not add capacity until he sees the orders,” Gupta said.

He anticipates that Oracle and AEP will upsize their fuel cell orders in the next few months, and that Google, Microsoft or Meta will soon sign on as new data center customers. (As Bloom’s very first customer, Google only used it to power a portion of its headquarters in Mountain View, California.) “Those are the near-term catalysts that I’m looking for,” Gupta said.

Analysts in general expect Bloom to report an even stronger fourth quarter, ending 2025 with $1.9 billion in sales and forecasting $2.46 billion this year, but volatility is likely to remain part of the stock story. Indeed, Bloom shares have experienced 76 moves greater than 5% over the last year. Thursday and Friday’s upturn exemplified the stock’s rollercoaster ride, starkly contrasted against last year’s low of $15.15 on April 9. Bloom’s shares fell 17.3% in November, even as fundamentals remained strong. On December 4, shares spiked more than 13% intraday. Four days later, the stock fell 6.2%, while still being up 24% over the prior two weeks.

In terms of competition, Bloom is considered the go-to for standalone power for data centers. Plug Power‘s hydrogen fuel cells are considerably more expensive to operate vs. LNG, so they are installed mostly as a backup source. Gupta dismissed FuelCell Energy as a rival, saying it “is probably 10 or maybe 15 years behind on technology from where Bloom was 10 years ago.”

Both of those stocks have seen significant losses in share price over the past year.

Another 2025 stock boomer, GE Vernova, has LNG turbines that are utilized as backup power sources at data centers, and an 80 GW backlog of orders, which will take the company into 2029 to fulfill, CEO Scott Strazik recently told investors. In the meantime, however, GE Vernova is developing fuel cell technology, different from Bloom’s, that it expects to offer data centers in two to three years.

Longer-term, industry watchers expect that nuclear reactors — large, traditional facilities and small modular reactors — as well as wind and solar sources, backed up by more efficient storage batteries, will be viable options for powering data centers. There’s even talk of building solar-powered data centers in outer space.

Those options are years away from being fully developed, though, making Bloom a right-now power solution for data center operators. “They have a good first-mover advantage in gaining entrenchment, where they’re going to see a huge spike in use,” Krause said.

For investors, especially after the run the stock has already been on, Bloom is a market bet that requires deep conviction. “This is not a stock for the faint of heart,” said Andrew Rocco, an analyst at Zacks Investment Research. It’s going to be volatile, he said, but added, “I expect these guys to grow high double digits or even triple digits over the next two to three years.”