The rise of artificial intelligence (AI) is creating unprecedented demand for energy. By one estimate, the world's power grids will need to triple their capacity by the end of the decade just to meet the projected electricity demand from data centers.
With permitting processes for new power plants moving at a snail's pace, data center operators and utility providers are looking for alternate sources of electricity that can be deployed immediately. Onsite power generation is one of them.
Bloom Energy (BE -6.01%), which makes modular fuel cell systems for onsite electricity generation, is positioned to reap the rewards. Its shares have rocketed 1,000% higher over the past 12 months. Even after such a run, Bloom deserves consideration as a top energy stock to buy. Here's why.
Image source: Bloom Energy.
Bloom Energy is a powerful AI play
Bloom's "energy servers" convert natural gas, biogas, or hydrogen into electricity, providing always-on power with little or no CO2 emission. They can be used as a backup or primary source of power. Unlike traditional engines and turbines, Bloom's energy servers are purpose-built for data centers, so they don't require extra equipment or retrofits to make them compatible.
Since November 2024, Bloom has announced new or expanded supply agreements with American Electric Power, Quanta Computer, and Oracle. Earlier this month, Bloom's stock soared when it announced a $5 billion partnership with Brookfield Asset Management to deploy Bloom's fuel cell systems at factories that produce AI infrastructure.
Bloom's annual revenue has been growing steadily since 2020, and it's showing no signs of slowing. Second-quarter revenue jumped 20% to $401.2 million -- Bloom's third straight quarter of record revenue -- and the company reported a dramatic reduction in its operating loss. Bloom is using digital twins of its fuel cell stacks -- in conjunction with AI -- to reduce costs and unlock new efficiencies.
If you're thinking of starting a position, you might want to wait until Bloom reveals its third-quarter results on Oct. 28. I'll be looking for further confirmation that growth is accelerating, and any signs of progress toward positive earnings on a GAAP basis.
