Shares of Bloom Energy (BE 0.31%) have risen more than 700% over the past year. That's a very large change in a very short period of time. But it makes sense, given Bloom Energy's business, which makes solid oxide fuel cells. Over the past year, this clean energy company has become a story stock. It isn't the first time that this has happened.
What does Bloom Energy do?
Bloom Energy makes solid state power cells in a factory setting. Power cells can provide always-on energy that is used to supply customers that need uninterrupted power or a reliable backup for grid-supplied power from a utility. The range of applications spans from utilities to hospitals, and includes data centers. Notably, the company's power cells can be linked together to create larger energy sources.
Image source: Getty Images.
There are two big benefits to Bloom Energy's fuel cells. First, they don't emit carbon dioxide and are, thus, considered a clean energy power source. That was the big story for a long time. But, more recently, the ability to put the fuel cells into place quickly and relatively easily has become more notable. The speed with which Bloom Energy's products can be deployed means that its products can be used to speed up the rollout of things like artificial intelligence (AI), a buzzword on Wall Street today.
There is no question that Bloom Energy has interesting technology. It has also drawn the attention of customers, noting the company's huge $2.5 billion product backlog at the start of 2025. Each new system put in place also creates a service contract, which supported a $9 billion service backlog at the start of 2025. Demand has been so strong, in fact, that the company is working on doubling its capacity.
The problem with the story isn't the story
The truth is that Bloom Energy's business seems highly likely to grow in the years ahead. In fact, it recently inked a deal with Oracle (ORCL -1.33%) to "deliver onsite power to Oracle AI data centers within 90 days." That's a speed to market that, basically, no regulated utility could match, and it speaks to why Bloom Energy is seeing such strong demand right now.
Investors have reacted to the AI link here with what can only be described as extreme enthusiasm. The stock's more than 700% rise over the past year is proof of that. But investors need to consider what that means on the valuation front. There's just one problem: The company has a long history of being unprofitable. So price-to-earnings isn't a very useful guide.
The price-to-sales (P/S) ratio, however, does offer some guidance, and it suggests that Bloom Energy is extremely expensive. To put a number on that, the current P/S ratio is roughly 12x versus a five-year average for the metric of 3x. This is the highest that Bloom Energy's P/S ratio has ever been. To be fair, this is a relatively young company, so there isn't a huge amount of history to go on. But investors are clearly pricing in a lot more good news than they had prior to 2025.
What's interesting is that Bloom Energy has seen two prior periods when investors rushed into the stock. Neither price spike was as large as the one today, but both ended the same way, with the stock falling. Bloom's skyrocketing stock price over the past year materially increases the risk that this period of enthusiasm will end with an even more painful crash.
You may have missed this rocketship
Bloom Energy has been discussing the opportunity ahead of it for a long time. Wall Street is finally starting to listen, but in normal Wall Street fashion, so much good news has been priced into the stock that perfection may be the only acceptable outcome. Only the most aggressive growth investors should probably be looking at Bloom Energy right now.
