Bloom Energy’s Valuation Faces Scrutiny Amid AI Power Demand Surge

Bloom Energy finds itself in the spotlight, buoyed by multi-billion dollar contracts and a share price hovering near record levels. The company's solid oxide fuel cell (SOFC) technology is gaining concrete traction, with a major utility and an infrastructure specialist now deploying it. However, market analysts are sounding a note of caution, pointing out that the current valuation leaves little room for operational missteps.

The market's enthusiasm is unmistakable in the share price performance. Recently closing at $152.31, the stock is precisely at its latest 52-week high and has recorded a staggering 679% gain over the past twelve months. This rally sets a high bar for the company's upcoming fourth-quarter 2025 results, scheduled for release on February 5th. Following a 54% surge since the start of the year, investors will scrutinize whether Bloom Energy can complement its new order announcements with robust profit margins and credible delivery timelines.

The future trajectory of the stock is likely to hinge on three core factors: the management's ability to substantiate lofty revenue forecasts with tangible project milestones; whether profitability can keep pace with rapid expansion; and if the current premium valuation can be justified by further large-scale deals in the AI energy sector.

Structural Tailwind: Powering the AI Revolution

A fundamental industry shift is fueling interest in Bloom Energy: the immense power requirements of artificial intelligence infrastructure. Data centers in many regions are pushing against grid capacity limits, and connecting new power sources is often a slow process. This creates a significant opportunity for Bloom's SOFC technology, which is designed to generate electricity directly on-site.

Recent industry projections cited in reports suggest electricity demand for AI applications could surge by more than 500% by 2026. In this context, decentralized, rapidly deployable power solutions are becoming increasingly critical—a favorable environment from which Bloom Energy is currently benefiting.

Should investors sell immediately? Or is it worth buying Bloom Energy?

This demand is translating into substantial contracts. Just over two weeks ago, the company announced a framework agreement with American Electric Power (AEP) valued at up to $2.65 billion. The agreement targets using Bloom's fuel cells to power data centers with exceptionally high and stable electricity needs. Coupled with existing partnerships, including one with Quanta Services, these deals form the basis for concrete revenue projections.

Analyst Outlook: Raised Target Amid Valuation Concerns

Reflecting this improved outlook, investment bank Jefferies significantly increased its price target for Bloom Energy shares on January 26, lifting it from $53 to $92. This adjustment stems from a more optimistic view of the company's revenue potential through 2026.

Jefferies now anticipates revenues of $2.9 billion for 2026, which is approximately 16% above the current market consensus. The analyst views the recent mega-orders from AEP and Quanta Services as solid evidence of Bloom's operational execution capabilities.

Despite this upward revision, Jefferies maintains its "Underperform" rating on the stock. The rationale is that at the current price level, the valuation is so elevated that even minor execution errors could have an outsized negative impact. In essence, while the company's narrative is compelling, the share price already appears to discount much of the future success.