What happened

After heating up in July and climbing 29%, shares of Plug Power (PLUG 4.02%) extended their gains in August and rose 31%, according to data from S&P Global Market Intelligence. The stock's rise in and of itself is noteworthy, but it's even more impressive when taken in context of the S&P 500's fall of more than 4%.

What propelled Plug Power to pop last month? Besides the passing of the Inflation Reduction Act, a new deal with Amazon and bullish commentary from analysts helped motivate investors to recognize the fuel cell specialist as a worthy addition to their portfolios.

So what

News surrounding the Inflation Reduction Act has consistently pushed shares of Plug Power higher throughout the summer. The bill provides $369 billion in funding for shoring up America's energy security, including tax credits for hydrogen production and storage. In late July, interest in the stalled legislation picked up steam when Sen. Joe Manchin voiced his approval of the bill. Investors continued to buy up the hydrogen stock in early August as well.

Following Manchin's approval of the legislation, Sen. Kyrsten Sinema revealed interest in signing off on the climate-friendly bill -- a promising sign that the stalled legislation would reach President Biden's desk, representing another catalyst for the stock's rise.

Shortly thereafter Biden signed the bill into law -- a feat that only a few months ago seemed highly unlikely. 

Besides the climate bill, investors took note of a new deal that Plug Power signed with Amazon. A partner of the e-commerce juggernaut since 2016, Plug Power announced to the delight of investors that beginning in 2025, it will supply Amazon with nearly 11,000 tons of liquid hydrogen annually.

Wall Street's growing belief that Plug Power's stock has room to run represented yet another factor for the stock's rise. 

  • J.P. Morgan raised its price target to $32 from $28, maintaining an overweight rating.
  • Susquehanna lifted its price target to $35 from $30.
  • Citi hiked its price target to $36 from $20.
  • Wells Fargo boosted its price target to $29 from $19.

Now what

With the tailwind of the Inflation Reduction Act at Plug Power's back, the market seems to believe that the company is well positioned to achieve its lofty growth ambitions. Couple that with a significant hydrogen production deal with Amazon, and many investors are downright giddy at the company's prospects.

But Plug Power has been down this road before. The Emergency Economic Stabilization Act of 2008, for example, provided tax credits for hydrogen and fuel cell projects, and the company has repeatedly announced impressive deals for its products and solutions. The result, however, has been growing revenue while failing to achieve profitability. Hydrogen investors seem to think things are different this time around, but I'm not so sure.