To The Moon

Last week, strength in the mega-cap tech stocks helped the S&P 500 $S&P 500(.SPX)$ notch a new all-time high with options expiration keeping the index pinned to the 6,300 strike. With the removal of that volatility suppressing flow, equities resumed along the path of least resistance to start the week.

The best-performing concepts is Hydrogen Energy. Considering the different perceptions of the stock, this time TigerPicks chose $Bloom Energy Corp(BE)$ to have a fundamental highlight to help users understand it better.

$Bloom Energy Corp(BE)$

Bloom Energy Corporation is engaged in stationary fuel cell power generation by market share. The Company provides distributed energy technology solutions to customers.

The Company manufactures advanced and versatile fuel cell energy platforms, supporting the commercial availability of two products: the Bloom Energy Server for generating electricity and the Bloom Electrolyzer for producing hydrogen.

Riding The AI Data Center Hype

On Thursday, the stock price reached a new multi-year high after an AI data center collaboration with $Oracle(ORCL)$ added more fuel to the fire.

Following the supply agreement with $American Electric Power(AEP)$ in November 2024, the Oracle collaboration represents Bloom Energy's second major AI data center announcement.

Unfortunately, the press release is lacking the granularity required to assess the agreement.

Judging by the wording, it might take some time for the collaboration to transform into actual orders:

AI Data Center PR Comparison

Assuming that Bloom Energy's fuel cells will be providing primary power for greenfield data centers, it would take several quarters to obtain required regulatory approvals.

As a result, investors should not expect a near-term impact on the company's financial results.

Hopefully, management will shine some light on the Oracle collaboration during the Q2 conference call next week but based on past experience, I would expect details to remain scarce.

Following a better-than-expected first quarter, analysts are projecting approximately 16% sequential revenue growth for Q2:

Q2 Consensus

That said, Bloom Energy will require a much stronger second half in order to achieve its full-year guidance:

FY2025 Outlook

In recent years, the company has consumed substantial amounts of cash during the first three quarters, and I do not expect this pattern to change meaningfully.

Key Financial Metrics

While Bloom Energy's quarterly performance can be impacted by project timing and large one-time items, management is not likely to adjust full-year expectations.

In the past, the company has opportunistically used substantial stock price increases to raise additional capital and/or address existing debt.

Debt

However, with no major near-term debt maturities (the company's August 2025 convertible notes are well in the money and will likely convert into new common shares) and almost $800 million in unrestricted cash at the end of the first quarter, Bloom Energy might abstain from raising additional equity at this time.

That said, with the company now trading at an eye-catching valuation of almost 30x my estimated 2026 EV/Adjusted EBITDA, management could very well consider capitalizing on the opportunity provided by the persistent hype.

Valuation and Price Target

In fact, the company's forward EV/EBITDA multiple is now approaching AI posterchild $NVIDIA(NVDA)$ . However, Nvidia's margins are a multiple of Bloom Energy's.

For my part, I remain concerned about the setup going into next week's earnings release as it will likely require a beat-and-raise quarter and enthusiastic AI data center projections to keep momentum going while mediocre numbers or even a capital raise are likely to result in the stock giving back a good chunk of its recent gains.

To better account for the AI data center opportunity, I have increased my assigned EV/EBITDA multiple from 15x to 20x (almost double the average multiple of related industries like renewable energy or utilities). Please note that the upcoming convertible note maturity will increase outstanding shares by approximately 3%.

While fighting momentum has been a losing proposition in recent months, I wouldn't chase the shares going into next week's Q2 earnings release.

Risk Factors

As discussed above, a beat-and-raise quarter coupled with enthusiastic AI data center projections would likely result in the shares rallying to new multi-year or even all-time highs above $40.

Bottom Line

Bloom Energy's shares rallied to new multi-year highs after the company announced an AI data center collaboration with Oracle.

While the press release lacked the granularity to assess the agreement, management will hopefully provide some color on next week's Q2 conference call.

With the company now trading at almost 30x my estimated 2026 EV/EBITDA, it will likely require a beat-and-raise quarter and tangible numbers regarding anticipated AI data center deployments for momentum to remain intact.

While I have raised my price target by almost 30%, I am downgrading the company's shares from "hold" to "sell" due to elevated valuation.

Admittedly, fighting momentum has been a losing proposition in recent months, but with risk/reward increasingly unfavorable, I wouldn't chase the shares going into next week's earnings release.

Stock Price Forecast:

Here are the target price forecasts for the next 12 months from analysts.

Based on 16 Wall Street analysts offering 12 month price targets for Bloom Energy in the last 3 months. The average price target is $26.55 with a high forecast of $35.00 and a low forecast of $18.00. The average price target represents a -22.68% change from the last price of $34.34.

Resource:

https://seekingalpha.com/article/4804721-bloom-energy-riding-ai-data-center-hype-but-downgrading-on-valuation

For whom haven't open CBA can know more from below:

🏦 Open a CBA today and enjoy privileges of up to SGD 20,000 in trading limit with 0 commission. Trade SG, HK, US stocks as well as ETFs unlimitedly!

Find out more here：

• Trade on a Cash Boost Account and enjoy up to 6 months of Commission-Free trading.

• 💰Join the TB Contra Telegram Group to Get $10 Trading Vouchers Now🎉

• 💰CBA Mini Course 1: What is Cash Boost Account(CBA)?