Bloom Energy Stock: Buy, Sell or Hold?

Energy helps sustain global economies, and the demand for it will only increase from here. A growing sector of the economy that is expected to need more energy, according to a recent study from Goldman Sachsinvolves the use of artificial intelligence (AI) applications and services such as OpenAI’s ChatGPT. The study says that demand for data center power is expected to increase by 160% by 2030.

There are lots of options where that energy can come from. One source that could help meet the considerable demand while decarbonizing the economy is hydrogen. Some see hydrogen as the “new oil” because it burns cleaner and could help companies meet their long-term carbon reduction goals.

Flowering energy (BE 1.36%) is developing technology for low-carbon and grid-independent power generation to position itself as a key player in meeting data center power demands over the next decade. With the hydrogen energy industry expected to grow into an $11 trillion market, is now a good time to acquire Bloom Energy?

Bloom Energy hopes to meet AI’s growing energy demand

Hydrogen-based power generation offers a versatile, clean and sustainable alternative to fossil fuels. The chemical reaction that turns hydrogen into energy produces only water and heat as byproducts, making it extremely attractive to entities looking to reduce their carbon footprint. Another added advantage of hydrogen is that it can be stored, transported and deployed when and where needed. The conversion process that creates the hydrogen fuel has historically been too expensive to be practical, but Bloom has developed technology to solve this problem.

Over the past two decades, Bloom Energy has perfected its technology so that it now creates hydrogen with less energy. Bloom Energy Server uses proprietary solid oxide technology to convert fuel such as hydrogen, natural gas, and biogas through a non-burning electrochemical process.

What makes Bloom’s technology appealing is that its modular servers can be clustered together to provide customers with hundreds of kilowatts to hundreds of megawatts of power based on their needs. It is also designed to stay online to provide power resilient to weather events, cyber security attacks or other network disruptions and can be installed faster than traditional power sources.

Image source: Bloom Energy.

Bloom’s cleaner-burning, grid-independent power generation platform makes it an attractive option for data center operators, who have seen energy demand explode thanks to the AI ​​revolution.

In May, the company announced a power capacity agreement with Intel to install additional megawatts of its fuel cell-based power server at Intel’s high-performance computing data center in Santa Clara, California. Last month, he partnered with NvidiaHyperscaler AI supported CoreWeave to generate on-site power for its high-performance data center in Illinois.

Here’s the latest look at Bloom’s financial picture

Much of Bloom’s revenue comes from power server sales. This requires a significant amount of capital upfront, and Bloom offers financing or pay-as-you-go plans to help clients.

Revenue growth has been solid, but this year, the company is seeing a slowdown in sales. Bloom’s total revenue was $571 million in the six months, down 1 percent from last year. Due to the nature of its product, sales can be a bit uneven for the company. Despite this, management expects second-half revenue to increase and projects revenue of $1.4 billion to $1.6 billion this year, or a 12% increase from last year at the midpoint .

One thing investors should keep a close eye on is Bloom’s profitability. The company posted a net loss of $308 million last year and another $119 million in the first half of this year. The company has yet to turn a profit and has work to do to reach that goal.

BE Revenue (TTM) data by YCharts.

It makes progress on non-GAAP operating income, which excludes things like stock-based compensation and restructuring charges. Since last year, it has narrowed its non-GAAP operating loss from $26 million to $3.2 million this year. It expects non-GAAP operating income of $75 million to $100 million by the end of this year.

Is Bloom Energy stock for you?

Bloom Energy is making solid progress in expanding its business and has signed key agreements in the past few months that validate its product. The company is positioned to play a key role in the growing demand for data center energy, and its resilient energy solutions could be an important part of helping companies reduce their carbon footprint. If you already own the stock, it still has potential, and holding onto it is still the best option right now.

Investors looking to capitalize on the clean hydrogen trend may find shares of Bloom Energy compelling despite its lack of profitability. However, I’d like to see the company make further progress in expanding its data center footprint and improving its bottom line before getting shares out of the stock.