Bloom Energy (BE +1.38%) has long been recognized for its clean energy solutions, serving a diverse range of large commercial and industrial customers. Its hydrogen fuel cells have helped large companies reduce their carbon footprint and enhance energy reliability.
However, Bloom's solid oxide fuel cells are highly versatile and can utilize a variety of fuels. Using them to power artificial intelligence (AI) data centers has become a practical solution in securing the electricity needs of advanced computer server installations.
That led investors to pile in, pushing Bloom Energy shares 300% higher in just four months last year. Many locked in those profits, though, as the year came to a close, pushing Bloom stock down 20.5% in December, according to data provided by S&P Global Market Intelligence.
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Strategic AI infrastructure partnerships
The data center opportunity could be huge for Bloom Energy. The stock's monster run may have been too much too fast, however. At its record November high, Bloom's market cap nearly reached $34 billion. That was for a company reporting about $1.8 billion in revenue over the last four record quarterly periods.
Investors reacted to two big announcements from the company. It has agreements with tech giant Oracle and global alternative asset manager Brookfield Asset Management, worth billions of dollars in projects.
The $5 billion strategic AI infrastructure partnership with Brookfield is "the first phase of a joint vision to build AI factories capable of meeting the growing compute and power demands of artificial intelligence," according to Bloom management. A deal announced earlier with Oracle will have the companies collaborating to provide on-site power to Oracle's AI data centers.
Bloom Energy is preparing to add capacity
Data centers can arrange Bloom's fuel cell platform as a microgrid to shield against power grid failures and disruptions. It's an ideal solution for AI infrastructure data centers needing a large amount of uninterrupted power.
Bloom will increase its manufacturing capacity to support these arrangements. It recently announced $2.2 billion convertible senior note offering. Most of the capital raised will be directly invested in the business, with a focus on research and development, as well as investments to expand manufacturing capacity.
NYSE: BE
Key Data Points
With future business prospects looking strong and increasing capacity on the horizon, the December stock slump could ultimately prove beneficial for some investors. Bloom Energy stock is still a risky play and a long-term investment. But shares are about 30% off the November high, making now a time to consider owning some.
