Bloom Energy's share price soared by an impressive 48% on a Friday.
Investors of Bloom Energy's (BE 0.89%) stocks are having a fantastic Friday as shares of this renewable energy company skyrocketed by 47.8% before 10:30 a.m. ET.
Yesterday, Bloom Energy revealed an agreement to supply up to 1 gigawatt's worth of fuel cells to the electric utility American Electric Power (AEP) -0.15%.
Bloom's significant news
This recent announcement follows a disheartening earnings report from Bloom just a week prior. However, Bloom managed to revive its image with the announcement of a partnership to establish an 80-megawatt fuel cell system for South Korea's SK Eternix. While a gigawatt equals 1,000 megawatts, today's news is 12.5 times larger than that, which explains the investors' reaction.
Bloom Energy explained that American Electric Power (AEP) plans to acquire its fuel cell systems to install them at the sites of some of its customers' AI data centers. (That's correct. Bloom Energy is now considered an AI-related stock.) The rollout will commence with an initial order of 100 MW worth of fuel cells, with additional orders planned for 2025 and a swift deployment.
Can Bloom Energy generate profits?
The AEP deal is predicted to account for approximately 77% of the total volume of fuel cells Bloom has ever deployed (1.3 GW) throughout its 23-year existence. Although Bloom didn't disclose the specific revenue associated with the AEP deal, historical financial data on Bloom's revenues since 2014 (the earliest data available on S&P Global Market Intelligence) suggests that the AEP deal could potentially generate revenues in excess of $7 billion for Bloom in the future.
Moreover, Bloom has already reached a stage where this revenue is considered profitable, with gross profit margins of nearly 24% in Q3, and operating and net margins finally appearing to be within reach.
This partnership could be the turning point for Bloom, potentially making the company profitable for the first time.
The positive investor sentiment towards Bloom Energy's stocks can be attributed to the company's significant agreement with American Electric Power (AEP), an electric utility, to supply up to 1 gigawatt's worth of fuel cells. This investing opportunity in the AI-related stock could potentially generate revenues in excess of $7 billion for Bloom in the future, contributing significantly to the company's financial growth and possibly making it profitable for the first time.
