Bloom Energy (NYSE: BE) saw its stock surge nearly 59% on November 15, becoming the top gainer on the NYSE after announcing a major deal with American Electric Power (NASDAQ: AEP) to supply up to 1 gigawatt (GW) of solid oxide fuel cells.
The news prompted multiple analysts to revise their price targets, reflecting optimism about Bloom’s growth potential.
At the time of writing, Bloom Energy shares were trading at $21.19, reflecting a 44% gain after reaching an intraday high of $22.50, levels not seen in over 20 months.
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Strategic deal highlights
The agreement with AEP includes an initial order of 100 megawatts (MW) of fuel cells, with additional orders anticipated in 2025.
This partnership builds on Bloom Energy’s ongoing collaboration with AEP, which has focused on deploying solid oxide fuel cells (SOFCs) in commercial and industrial applications.
Bloom’s fuel cells, currently powered by natural gas, can transition to hydrogen as it becomes more widely available, offering a pathway for companies to meet their sustainability targets.
These SOFCs also boast rapid deployment, high availability, and a power density of 100 MW per acre.
The initial installations will address the growing power needs of AI data centers, providing a faster, more efficient alternative to traditional grid upgrades.
“These fuel cells will help provide data centers and other large customers with the power they need to quickly expand in our regulated footprint as we continue to build infrastructure to deliver reliable energy for all our customers,” AEP CEO Bill Fehrman said.
Analyst reactions and profitability prospects
The AEP agreement has prompted several analysts to upgrade their outlook for Bloom Energy.
Biju Perincheril of Susquehanna Financial Group raised the target from $16 to $20, describing the agreement as a “massive win” that validates Bloom’s fuel cells as a viable solution for AI data centers, effectively addressing grid constraints and rising energy demand.
BMO Capital raised the firm’s price target on Bloom Energy to $19.50 from $12.
The firm expects the stock to react positively to the deal, given its transformative potential. However, BMO maintained a “Market Perform” rating, pointing out uncertainties surrounding the transaction, particularly regarding the timeline and cadence for the additional 900 megawatts of fuel cells expected beyond the initial order.
BTIG also raised its price target for Bloom Energy to $20 from $16, maintaining a Buy rating.
The firm highlighted the AEP supply agreement as a quick solution for powering data centers and large energy users while permanent grid infrastructure is developed.
AEP expects its commercial load to grow 20% annually over the next three years, though no timeline for deploying the fuel cells was provided.
Similarly, Piper Sandler upgraded the stock from “Neutral” to “Overweight” and revised the price target from $10 to $20.
Path to profitability
The AEP agreement represents an important milestone for Bloom Energy. Although the company has not disclosed the exact revenue impact, historical revenue trends suggest the deal could generate over $7 billion.
The company has already achieved gross profitability, with gross margins reaching nearly 24% in Q3. Furthermore, Bloom Energy is steadily progressing toward profitability at both the operating and net margin levels, reinforcing its favorable financial trajectory.
Featured image via Shutterstock
