What happened

The S&P 500 may have lost momentum in August, but not Bloom Energy (BE 1.02%). The hydrogen stock rallied 25.6% in the month, according to data provided by S&P Global Market Intelligence. With those gains, Bloom Energy shares surged a whopping 54% between just July and August when the S&P 500 barely managed to move 4.5% higher.

The momentum in Bloom Energy stock is unlikely to die down, given the green hydrogen industry's potential and the company's growth prospects.

So what

Clean energy stocks first got a massive boost in August after the Senate unexpectedly passed the Inflation Reduction Act (IRA), a toned-down version of President Joe Biden's Build Back Better Plan, which proposed huge incentives for renewable energy, among other things, before it was shelved last year. With Biden eventually signing the bill into law, Bloom Energy and other renewable energy stocks shot up further as investors bet on the incentives and tax credits for green hydrogen and other clean energy sources to kick in under the Act.

Bloom Energy topped the enthusiasm with a hugely encouraging outlook for 2022 that even overshadowed a dilutive stock offering.

Bloom Energy reported record second-quarter revenue worth $243.2 million. During the quarter, the company bagged its first electrolyzer order in the U.S. and deployed its first fuel cells in the European Union region for Italian luxury-car maker, Ferrari.

The most important takeaway from Bloom Energy's earnings report, though, was narrower earnings before interest, taxes, depreciation, and amortization (EBITDA) as investors now want to see the growth stock convert its growing top line into profits. Bloom Energy expects to generate more than $1 billion in revenue this year and turn operating cash flow positive. That would be a milestone for the company.

With so much happening within a span of a few days, several analysts turned bullish on Bloom Energy in August and further pumped investor interest up in the stock. Notable analyst ratings from last month include:

  • Bank of America analyst Julien Dumoulin-Smith believes Bloom Energy's share price doesn't reflect the opportunities ahead and posited a price target of $34 a share.
  • Susquehanna analyst Biju Perincheril raised Bloom Energy stock's price target to $35 per share from $30 per share.
  • Morgan Stanley analyst Stephen Byrd is bullish about the IRA and increased Bloom Energy's price target to $37 a share from $21 per share.
  • Truist analyst Bronson Fleig raised the stock's price target to $31 a share from $19 a share.

Now what

Green hydrogen is finding more takers. E-commerce bellwether Amazon, for example, recently signed a big contract with Bloom Energy's rival, Plug Power.

Bloom Energy, however, is already generating more revenue than Plug Power. Now that it's on its way to generating positive cash flow even before opportunities under the IRA roll in, this hydrogen stock looks like a long-term winner in the making.