Shares of on-premises electricity generator provider Bloom Energy (BE 9.28%) plunged initially today, down 13% at one point, before recovering to a 1.4% decline as of 3:26 p.m. ET.
Bloom reported second-quarter earnings last night, beating revenue estimates but missing the mark on the adjusted (non-GAAP) earnings-per-share (EPS) line.
Of course, Bloom is a growth stock, so the top line matters more. However, since the stock had already had a massive run following recent deals with big data center and utility names, investors appeared to take profits on the less-than-absolutely perfect quarter. Management also merely "reaffirmed" 2025 guidance, without raising numbers.
NYSE: BE
Key Data Points
Bloom Energy is blooming at AI data centers
In Q2, revenue climbed 19.5% to $401.2 million, beating expectations, while adjusted losses per share narrowed from $0.27 to $0.18, missing expectations of $0.08.
Bloom management also said it was looking forward to doubling its production capacity, which will no doubt entail higher costs. But that capacity growth appears to be backed up by strong demand.
Bloom's energy server product can produce electricity from either natural gas or hydrogen via a chemical process without combustion, thereby lowering emissions. The technology appears to be on the brink of much wider adoption, given the need for reliable, cleaner electricity at AI data centers. Last week, Bloom announced a direct partnership with Oracle (ORCL +0.26%) in which Bloom will supply on-site power to Oracle data centers within 90 days.
The announcement sent the stock flying, and CEO KR Sridhar noted the partnership may pave the way for more direct deals with AI hyperscalers. On the conference call with analysts, Sridhar noted the Oracle deal is "the first time we as a company are directly interacting with the hyperscaler as our customer...we are the primary source, and it is load following. So it will prove that we can load follow at large scale."
Image source: Getty Images.
Earnings seem to be a "sell-the-news" event
Bloom has exciting AI-fueled growth potential, but since the stock had already rocketed higher last week on the Oracle announcement, it appears investors were eager to take profits on the less-than-perfect quarter. However, the bounce back following today's initial plunge indicates there weren't really any red flags to speak of.
Valuation would be the biggest risk here, as Bloom's stock is quite expensive. Shares trade for 5.5 times sales and 80 times this year's adjusted earnings estimates.
