Bloom Energy (NYSE: BE) investors are having a terrific Friday, as shares of the renewable energy company surged 47.8% through 10:30 a.m. ET.
Last night, Bloom Energy announced a deal to supply up to 1 gigawatt’s-worth of fuel cells to electric utility American Electric Power (NASDAQ: AEP).
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Last night’s announcement comes on the heels of a miserable earnings report from Bloom last week — a report that was redeemed by Bloom’s announcement of a deal to set up an 80-megawatt fuel cell system for South Korea’s SK Eternix. There’s 1,000 megawatts in a gigawatt, though.
So today’s news is 12.5 times bigger than that one, which explains the size of the reaction investors are having to it.
As Bloom explained, AEP intends to buy Bloom’s fuel cell systems to deploy them at the location of some of its customers’ AI data centers. (Yes, you read that right. Bloom Energy is an artificial intelligence stock now.) Rollout will begin with an initial order of 100 MW worth of fuel cells (so already more than last week’s announcement), with more fuel cells to be ordered in 2025, and being “rapidly deployed.”
In total, the AEP deal promises to roll out roughly 77% of the volume of fuel cells Bloom has already deployed (1.3 GW) over its entire 23 years of existence. While Bloom didn’t say how big the AEP deal will be in terms of revenue, if you compare historical data on Bloom’s revenues since 2014, which is as far back as the historical data goes on S&P Global Market Intelligence, this implies the AEP deal could eventually yield revenues well in excess of $7 billion for Bloom.
Moreover, Bloom has already reached a point at which this revenue is gross-profitable, generating gross profit margins of nearly 24% in Q3, and while profitable operating and net margins are finally looking achievable.
This deal could be the one that puts Bloom over the top, and finally turns the company profitable.
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