Demand for AI Fuels Growth Opportunities for Utilities and Bloom Energy
Artificial intelligence (AI) stands to significantly alter various sectors, but the technology requires substantial hardware resources. Critical to this operation are utilities, which may struggle to keep pace with soaring electricity demands. In this landscape, Bloom Energy (NYSE: BE) is poised to address emerging needs. Here’s what you should know.
AI’s Power Needs Are Rising
AI systems operate on advanced computers known as servers, located in data centers. These facilities require a constant and robust supply of electricity to function effectively and maintain a cool environment. Without sufficient energy resources, establishing AI data centers becomes infeasible, posing a challenge for the AI industry.
Electricity consumption for AI is expected to surge by 300% over the next decade. This increase will benefit electric utilities; however, it presents a key challenge. AI firms are eager to ramp up processing power quickly, while utilities face regulatory hurdles that delay infrastructure development. Regulated utilities must secure government approval before investing in new power plants and infrastructure, which can be a lengthy process.
The shift towards electric vehicles (EVs) adds another dimension to this demand. Forecasts suggest that electricity usage from EVs could skyrocket by 9,000% by 2050. Although this timeframe is more manageable for utilities, it underscores the need for expedited electricity supply solutions.
Bloom Energy’s Timely Solutions
Amid these challenges, AI companies require immediate solutions for their power needs. Bloom Energy provides a viable alternative by producing hydrogen fuel cells, which can be manufactured in a factory and deployed as necessary. This allows AI data centers to start operations without waiting for utility infrastructure upgrades.
As utilities develop sustainable energy solutions, Bloom Energy’s products can be relocated to support other facilities requiring additional power. The company entered 2025 with a robust $2.5 billion product backlog, indicating strong demand. Additionally, each fuel cell generates service agreements, contributing to a larger $9 billion service backlog.
Recently, Bloom Energy secured a deal with American Electric Power (NASDAQ: AEP), committing to supply 100 megawatts of fuel cells over the next decade, specifically aimed at meeting AEP’s growing data center demands. As a result, Bloom Energy stands to gain both short-term benefits from sales and long-term advantages from service contracts.
Path to Sustainable Profits
Despite its growth potential, Bloom Energy has yet to achieve sustainable profitability, which may deter conservative investors. However, for those willing to take calculated risks, Bloom Energy appears well-positioned to meet the burgeoning power demands of the AI sector expeditiously, paving the way to future profitability.
Investment Considerations for Bloom Energy
Before investing in Bloom Energy, take into account the following:
Recently, analysts highlighted their picks for the 10 best stocks to buy now, and Bloom Energy was not included. These selected stocks have promising potential for strong returns in the forthcoming years.
Historical context: Interested investors can consider previous successful recommendations, such as Netflix and Nvidia, which yielded exceptional returns over time.
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
