Shares of Bloom Energy (BE) rallied 56.3% in July, according to data from S&P Global Market Intelligence.
Bloom had several pieces of good news during the month. In a pleasant surprise, the company's fuel cells were able to qualify for tax credits under changes made to the "One Big, Beautiful Bill." Then, later in the month, Bloom inked an agreement to supply Oracle (ORCL 0.28%) data centers with its on-site fuel cells.
Finally, the company reported earnings on the last day of the month; however, the slight post-earnings sell-off occurred on August 1 and wasn't captured in July's rally.
Bloom gets a boost from Congress and Oracle
Bloom makes fuel cells that can convert natural gas or hydrogen into electricity without combustion, making them a cleaner alternative than other options. Still, it was unclear as to whether fuel cells would qualify for federal clean energy tax credits, after changes were made to the existing tax law in the "One Big, Beautiful Bill."
But while some clean energy segments such as solar and wind faced increased restrictions, fuel cells remained eligible for the full investment and production tax credits for low-carbon energy until 2034, when the tax credit will begin phasing out.
JPMorgan & Chase sell-side analyst Mark Strouse wrote in a note, "As competing gas turbine pricing and lead times remain elevated, we believe the tax credits for fuel cells can push hesitant BE customers over the finish line and expect order activity to increase accordingly."
Lo and behold, on July 24, Bloom inked a purchase order with Oracle (ORCL 0.28%), its first direct order with a cloud hyperscaler for deployment of Bloom's energy servers at Oracle Cloud Infrastructure (OCI) data centers. While the scale and scope of the Oracle deal weren't outlined specifically, it is the first time Bloom is working directly with a hyperscaler, and not a data center real estate company or electric utility. Thus, the Oracle deal could serve as a jumping-off point for more large deals if Bloom executes.
Image source: Getty Images.
Bloom is an interesting AI play
Bloom's solutions may be an ideal fit for the AI age, as AI data centers have accelerated overall electricity demand beyond capacity while companies still try to limit carbon emissions and pollution. Certainly, the Oracle deal and tax credit confirmation increased the demand outlook for the company last month, with an upside that is hard to quantify.
However, the market is now pricing in some strong growth, with the stock trading at 77 times this year's earnings estimates and 45 times 2026 estimates.
