Bloom Energy witnessed a significant surge, with a more than 50% increase in its value during July.
Bloom Energy, a company renowned for its fuel cell technology that transforms natural gas or hydrogen into electricity without combustion, witnessed a substantial surge in its stock price. The company's shares, traded under the symbol BE on the stock market, rallied 56.3% in July.
This surge can be attributed to a couple of key events. First, the company reported its earnings on the last day of July, which seemed to impress investors. However, a slight post-earnings sell-off on August 1 was noted, but it did not dampen the momentum of July's rally.
Another significant factor contributing to the increase in Bloom Energy's stock price is the company's deal with Oracle. The tech giant signed an agreement to supply its data centers with Bloom Energy's on-site fuel cells. This marks the first direct order with a cloud hyperscaler for Bloom Energy, and it could serve as a starting point for more large deals if executed successfully.
The Oracle deal is not only beneficial for Bloom Energy in terms of potential future business but also for its image. As data centers, particularly those powering AI, require more electricity and are under increasing pressure to reduce carbon emissions, Bloom Energy's solutions could be a good fit for the AI age.
JPMorgan & Chase's sell-side analyst, Mark Strouse, expects increased order activity for Bloom Energy due to stock market tax credits for fuel cells. The federal clean energy tax credits for low-carbon energy remain eligible for fuel cells until 2034, with a phase-out beginning in 2034. This stock market tax credit, which Bloom Energy's fuel cells qualified for under changes made to the 'One Big, Beautiful Bill,' is expected to further boost demand for the company's products.
The Oracle deal and stock market tax credit confirmation increased the demand outlook for Bloom Energy last month, as reflected in the stock's trading. The stock is currently trading at 77 times this year's earnings estimates and 45 times 2026 estimates, reflecting the market's expectations for strong growth.
In conclusion, Bloom Energy's strong earnings report and the Oracle deal have boosted the company's stock price in July. The potential for more large deals and the stock market tax credits could contribute to Bloom Energy's growth in the market in the coming years.
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