Plug Power (PLUG 0.90%) has attracted significant attention over the years. The company is an early developer in the clean hydrogen economy, with fuel cells, electrolyzers, and hydrogen infrastructure aiming to decarbonize industries such as transportation and logistics.
The green energy policies a few years ago gave Plug Power a boost, but the tides have shifted, and the company continues to burn cash. In fact, since going public over 25 years ago, Plug Power has never turned a profit. The reality is that the nascent hydrogen economy has not developed.
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Instead, investors looking to capitalize on the booming demand for clean energy have been turning to Bloom Energy (BE 1.49%). The company offers a product that can address companies' growing energy needs today, rather than waiting for an industry to develop.
If you're thinking of investing in Plug Power, here's why Bloom Energy is a better buy today.
Plug Power's long path toward developing a hydrogen ecosystem
Founded in 1997, Plug Power has failed to turn an annual profit despite years of operations. From the beginning, the company hoped to be a key player in the hydrogen energy ecosystem. However, green hydrogen faces several challenges, most notably its high cost of storage and transport. As a result, the market has failed to take off due to high costs and low adoption rates.
Plug Power has its work cut out for it. First, it must continue to develop the green hydrogen market. The company offers electrolyzers designed for industrial producers to produce hydrogen fuel on-site, along with hydrogen fuel cell systems for applications such as forklifts and material-handling vehicles.
Additionally, it must figure out how to generate revenue efficiently and stop burning through so much cash. Over the past 12 months, Plug Power has reported a loss of more than $2.1 billion on revenue of $676 million.
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To improve the business's economics, Plug Power has launched Project Quantum Leap to reduce costs and focus its efforts on its most profitable business lines. The company is focusing on its electrolyzer sales and has also entered into tentative equipment deals.
Management is hopeful it can end the year with a break-even gross margin and expects to achieve positive earnings before interest, taxes, depreciation, and amortization (EBITDA) by the second half of next year.
But it has an uphill climb. Not only does it need to improve its bottom line, but it also faces a less favorable political environment in the United States for renewables.
Bloom Energy is riding the AI wave higher
Bloom Energy is a different type of energy company. It sells solid-oxide fuel cell power systems for on-site electricity generation. What makes Bloom particularly compelling right now is that it can quickly meet the growing demand for energy from data center operators and industrial businesses. Not only that, but it can run on a variety of fuels, including natural gas, biogas, or hydrogen.
Image source: Getty Images.
The company has secured several major deals over the last couple of years. For example, in August, it agreed to a financing arrangement with Brookfield Asset Management for up to $5 billion over five years to fund future fuel cell projects. In July, Bloom announced its first data center power deal for Oracle. Bloom fulfilled the delivery in 55 days, demonstrating its rapid deployment capability and opening the door for more large-scale projects.
Most important for investors is that Bloom has actual revenue and is improving its operating income. Analysts estimate Bloom will generate $1.9 billion in sales this year and $2.46 billion next year as solid oxide fuel sales increase. Meanwhile, generally accepted accounting principles (GAAP) earnings per share (EPS) are expected to be -$0.14 this year, but improve to $0.64 next year and continue growing from there.
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Bloom Energy solves today's power grid bottlenecks
Plug Power has yet to turn a profit and continues to burn cash. If you bought the stock at any point over the past quarter of a century, you lost money, and you will likely continue to lose money if you buy it right now. Plug relies on the development of the hydrogen market and still needs to improve its financial position.
Meanwhile, Bloom Energy offers a product today that meets data centers' growing demand for on-site power. This is a necessary measure at this time because today's power grid cannot meet growing energy demand. According to the Bank of America Institute, U.S. electricity demand is expected to grow 2.5% annually over the next decade, which is five times faster than the growth rate over the past decade.
Bloom's fuel cells could be a crucial bridge to meet this demand, creating a powerful tailwind for the company in the years to come. If you're an investor looking to capitalize on this trend, Bloom Energy is a more attractive investment option today than Plug Power.
