Plug Power (PLUG +1.97%) stock is on the rise once again. Since 2026, shares have increased in value by nearly 25%.
Much of this rise relates to the company's latest quarterly earnings results, which delivered multiple positive surprises. Could the next five years create giant profits for patient shareholders? Considering the two factors below should help you arrive at your own conclusion.
NASDAQ: PLUG
Key Data Points
1. Artificial intelligence could accelerate Plug Power's growth
There is a seismic shakeup occurring in the energy sector right now. For decades, electricity generation and demand in the U.S. was on a constant upward trajectory. But from 2005 to 2020, this growth stagnated. In recent years, however, electricity demand has once again established an upwards trajectory. Estimates now call for 4% annual demand growth through 2030.
What causedd this shift? Largely, it's been fueled by the rapid rise of AI. In 2024, data centers -- critical infrastructure that makes AI technologies possible -- accounted for 4.3% of the U.S. electricity demand. By 2030, its share is expected to rise to 11.7% -- a threefold increase!
AI data centers will need a lot of new power to operate. New sources of energy will quickly be needed. That's especially true considering rising societal backlash in response to AI data centers overwhelming local grids, leading to rising electricity prices for many everyday consumers.
Plug Power believes the AI industry could turn to its hydrogen fuel cell technology to power many new data centers, some of which may be in remote locations. Using hydrogen as an independent fuel source could provide a reliable base load while severing the facility from the local grid when desirable.
After decades of promise, Plug Power's management team seems to believe that AI has finally unlocked the right customer fit for its technology -- a customer base willing to pay a premium simply to achieve a reliable base-load power supply quickly.
Image source: Getty Images.
2. When will hydrogen fuel become cost competitive?
According to some experts, up to $7 trillion may be spent between now and 2030 to build new data centers. Even if Plug Power takes only a tiny slice of this potential market, it could result in big upside versus the company's current $3.8 billion valuation.
Importantly, however, hydrogen fuel isn't the only potential alternative for scrambling data center operators. There is also a host of other up-and-coming technologies -- such as SMR nuclear technology, for example -- that could be a better long-term fit for the AI data center build-out. Many of these potential alternatives already have a long list of data center contracts, whereas Plug Power's real-world traction in this market remains very limited.
While AI data centers may be willing to pay a premium for new reliable energy sources, the reality is that most forms of hydrogen fuel remain too costly for mass scale. Cost competitiveness may not be achieved for decades.
One thing is very likely: Hydrogen fuel won't become cost competitive at scale within five years. And even if it somehow does achieve this difficult feat, there's no guarantee that Plug Power's specific technological approach will be the winner.
