Shares of Bloom Energy (BE +10.21%) rallied 74.2% in January, according to data from S&P Global Market Intelligence.
Bloom's solid oxide fuel cell technology can generate electricity from natural gas and hydrogen without combustion, reducing pollution when natural gas is used. As such, Bloom's technology has found favor among certain AI data center companies that need lots of new power supply.
This resulted in a massive year for Bloom in 2025, in which the stock nearly quadrupled. Yet a prominent announcement on Jan. 8 propelled the stock even higher to start 2026.
NYSE: BE
Key Data Points
AEP exercises its option for a lot more fuel cells
On Jan. 8, Bloom disclosed that utility company American Electric Power (AEP +1.68%) had exercised an option to buy hundreds of megawatts (MW) more of Bloom's energy servers.
For context, back in November 2024, AEP had purchased 100 MW of Bloom Energy servers. But as part of that deal, AEP also had the option to purchase up to another 900 MW of those servers in the future. The Jan. 8 filing disclosed that on Jan. 4, AEP exercised "a substantial portion of its option" for Bloom's fuel cells for $2.65 billion. AEP will use those cells as part of an energy generation facility it's building in Cheyenne, Wisconsin, which has signed a 20-year offtake agreement with a "high investment grade" third party.
On top of the new agreement, AI infrastructure stocks in general did very well in January, based on news flow and fourth-quarter earnings reports from top semiconductor and data center companies.
Image source: Getty Images.
Bloom's revenue is set to explode, but it's priced for that
A $2.65 billion sale is a massive deal for Bloom, given that the company only generated $1.82 billion in revenue over the past 12 months. So, it's no wonder the stock bounded higher on this news.
However, Bloom's valuation appears to reflect the new deal. The stock currently sports a market cap of $37 billion, while the highest Wall Street analyst revenue target for 2026 is just $3.16 billion. Moreover, Bloom isn't a high-margin company; its gross margins were just 29.2% last quarter. So, Bloom will have to grow significantly over the coming years and perhaps expand margins to justify its current valuation.
Fortunately, it appears Bloom will see strong growth in the near-to medium-term. Yet at this valuation, the stock will be vulnerable to a significant pullback if either the company or the AI buildout encounters any setbacks.
