Key Points
Booming electricity demand is creating new opportunities for clean energy companies.
Bloom Energy is seeing strong growth on its top and bottom lines amid robust demand from data centers.
Plug Power is undergoing a multiyear turnaround effort to improve its finances and achieve profitability.
America’s appetite for power is growing. Between booming artificial intelligence (AI) data centers, grid resiliency, and expanding industrial demand, the Bank of America Institute projects U.S. electricity consumption to grow at a 2.5% annual rate over the next decade, five times faster than during the previous 10 years.
That shift could create opportunities for niche clean energy companies, including Bloom Energy (NYSE: BE) and Plug Power (NASDAQ: PLUG). Both are linked to the hydrogen economy, but they operate at very different points in the value chain, and one is delivering stellar growth, while the other is engineering a turnaround. Here’s what investors need to know.
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Booming demand has propelled Bloom Energy to profitability
Bloom Energy is operating a highly profitable business right now. The company is seeing incredibly strong demand from data center operators for its solid-oxide fuel cells, which can run on a variety of fuels, including natural gas, biogas, or hydrogen.
What makes Bloom’s product compelling for hyperscalers is its ability to deliver on-site power in a few short months. In contrast, hooking up to the power grid can take several years. Right now, technology companies face massive pushback over their energy use and its potential impact on households, leading many to strike deals with companies like Bloom that can deliver power on-site and off-grid.
In the second quarter, Bloom’s revenue topped $1 billion for the first time ever, up a whopping 166% from last year. The company’s non-GAAP gross margin reached 34.3%, while it reported a generally accepted accounting principles (GAAP) net income of $198.9 million. The company also raised its earnings outlook, projecting revenue of $3.9 billion to $4.2 billion for fiscal year 2026.
Plug Power’s business has struggled with high operating costs and accumulating losses
Plug Power has focused on building out the hydrogen ecosystem. The company’s largest product line is its equipment, including proton-exchange membrane (PEM) fuel cells that power electric forklifts, reach trucks, and other material-handling equipment. It also offers electrolyzers, which let customers create their own hydrogen on-site, sells hydrogen fuel, and earns fees from service and maintenance contracts.
However, Plug has accumulated losses since its founding. In Q2, the company racked up another $190 million in losses, and its accumulated deficit now stands at $8.7 billion. The company is taking steps to improve profitability and has launched Project Quantum Leap to achieve this.
So far, Plug is making progress. The company’s total gross margin improved to -0.9%, up from -30.7% a year ago. The company reduced operating expenses by 50%, driven by asset recoveries, and net operating cash use fell by 58% from Q1.
Management hopes to achieve positive earnings before interest, taxes, depreciation, amortization, and share-based expenses (EBITDAS) in Q4 this year and profitability by the end of 2028.
What’s next for these energy stocks
Plug Power is undergoing a turnaround to improve its finances and finally achieve profitability. For investors buying today, you’re hoping management can navigate this multiyear turnaround successfully and turn its hydrogen ecosystem from a cash-burning venture into a viable business model.
Bloom Energy is growing rapidly and recently expanded its deal with Brookfield Asset Management to deploy its solid-oxide fuel cells. If you’re looking to capitalize on the booming demand for energy from hyperscalers, Bloom Energy is a top stock to own right now.
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