Parkev Tatevosian, CFA on $BE (Oct 31, 2026)

Bloom Energy, which is becoming a supplier to giant data centers, announced quarterly financial results in which revenues rose 138% to $1.24 billion .

Bloom Energy is one of the energy companies I am monitoring as a potential investment opportunity to capitalize on the growing demand for powering these data centers .

Bloom Energy also announced these results, with its operating profit margin rising to 23% compared to 9% in the same quarter last year. This is exactly what I see with "Bloom Energy ", and it is what attracts me to this company as a potential investment for my portfolio.

So, let's take a closer look together to see if it's a buying opportunity, by balancing its recent improved performance with its valuation to determine if it's an attractive AI stock worth buying.

Looking at Bloom Energy's 10-year revenue growth chart, I can see this acceleration in recent years. In 2024, the company's revenues were declining from $1.5 billion to about $1.25 billion before it actually took off and began generating revenue from giant companies that were looking to " Bloom Energy" as a reliable power source, as a result of the constraints caused by the large number of data centers being built across the United States and the lack of available power connectivity.

Therefore, Bloom Energy has emerged as a practical and reliable option for companies building these data centers, and revenues have jumped to $3.8 billion over the past 12 months.

This represents approximately three times what it was about a year and a half ago. I have already mentioned that its operating profit margins have increased significantly compared to the same quarter last year.

Given the high capital intensity of this business, I wanted to see an improvement in its cash flows as well. In this way, the company has the capital needed to reinvest in the business to accelerate supply, because demand is waiting for it.

If the company manages to build, they have customers waiting in line to buy their products and services. Indeed, their cash flow from operations is improving significantly, reaching 18% after being -30% two years ago.

Similarly, returns on invested capital have also improved, reaching 13.7% over the past 12 months .

This has risen from negative levels in recent years, which is a positive sign for investors, highlighting that this business could be profitable, especially with increasing demand.

Currently, data centers are the main driver of demand for the company's products, but the country's and the world's energy needs, in this regard, are escalating as the economy begins to shift towards electricity.

Data centers will be the driving force over the next few years , but there may be other catalysts such as the spread of electric cars and self-driving car technology. We have robotics and logistics, robotic automation in warehouses, and the list goes on.

So, this is what has led to the acceleration of energy demand, but I think this high demand will continue for several years, if not several decades.

When considering the business and its prospects, and weighing them against the valuation based on the price-to-earnings ratio , it appears to be undervalued at 41. Given that revenues are growing in triple digits and that the sustainability of those revenues is likely to continue for several years; Given that operating margins and cash flow from operations are also improving, along with returns on invested capital, the company is not generating more revenue because it is offering more attractive terms, discounts, or promotional offers ; In fact, it generates more revenue because there is a structural shift in energy demand worldwide, and this is causing a surge in the purchase of the company’s products and services.

Therefore, after the company announced its financial results and raised its forecasts, I also revised the company's discounted cash flow estimates upwards. I expect the company to generate a few hundred million more in free cash flow in 2027 and 2028, and in the long term as well.

So, after those reviews, my estimate of the stock's fair value has increased , but it is still lower than the current market price.

I calculated the value of the work at $158, while the current market price is around $220 at the time this video was recorded. To answer the question I asked myself, is this a good buying opportunity right now? I don't think so, not yet.

I am very optimistic about this company's long-term prospects. I would like to be able to buy this stock, but I just want to pay a lower price than it is today. Or I want to see the work performance continue to improve, while the price remains the same as today, so that I get work worth more, but at the same price.

Regardless, I will not be buying now at these prices, so I reiterate my "hold" rating for this business.