Bloom Energy shares BE traded lower in trading on Friday despite the fuel-cell maker reporting third-quarter earnings and revenue well above Wall Street expectations, as investors weighed its aggressive spending on manufacturing expansion against concerns about cash flow.
The stock was down 9% during trading. Broader market weakness following a selloff in tech stocks on concerns that AI trade could be faltering likely also added to the pressure.
Bloom Energy reported earnings per share of 94 cents for the September quarter, up from 15 cents a year earlier and comfortably above the 69 cents expected by analysts polled by FactSet.
Revenue surged 138% to $1.24 billion, beating the consensus estimate of $1.07 billion.
The company also raised its full-year revenue guidance to between $4.4 billion and $4.6 billion, above the analyst consensus of $4.26 billion.
It maintained its adjusted gross margin outlook at 34%.
The revenue forecast has risen 41% since February, according to JPMorgan analysts, reflecting the pace of demand for the company’s power-generation systems.
Record capital spending weighs on cash flow
Despite the strong results and upgraded outlook, Bloom Energy recorded its highest-ever capital expenditure in the quarter, contributing to negative net cash flow of approximately $180 million.
The company has been investing heavily to increase factory output and expand manufacturing capacity as it works through record backlogs.
Its spending is focused on solid-oxide fuel cell systems designed to supply electricity to large-scale artificial intelligence and hyperscale data centres, including Oracle’s Project Jupiter.
The investment highlights the challenge facing Bloom Energy as it seeks to capitalise on demand for reliable on-site power while managing the costs of scaling production.
Its valuation also leaves limited room for disappointment, with the stock having gained more than 120% this year.
Investors are weighing the potential for continued rapid growth against the cash required to fund manufacturing expansion and customer deployments.
Analysts flag execution and valuation risks
BTIG lowered its price target on Bloom Energy to $250 from $295 while maintaining a Buy rating following the results.
This represents a 15% upside from Thursday’s close.
The brokerage said near-term margin pressure could emerge as the company ramps up new production capacity and accommodates accelerated customer timelines.
While management sees a path to expanding manufacturing capacity to and beyond 5 gigawatts, the timing remains unclear.
BTIG said Bloom Energy remains positioned to deliver generation capacity, but the cost of adding manufacturing facilities is weighing on margins.
Oppenheimer maintained its Perform rating, citing concerns about cash flow as the company expands its customer asset base.
The firm highlighted a $430 million increase in Customer Assets and said investors may remain cautious until the cash conversion cycle for deployments becomes clearer.
However, Oppenheimer said it remained impressed by the scope and pace of growth, supported by the advantages of faster power availability, lower emissions and modularity.
AI power demand provides a longer-term opportunity
Bloom Energy has emerged as a beneficiary of the expansion of AI infrastructure.
Its solid-oxide fuel cells generate electricity through an electrochemical process rather than conventional combustion, attracting interest from cloud providers and data-centre operators facing rising power requirements.
The shares received additional attention after SpaceX CEO Elon Musk said on Wednesday that electricity generation and cooling infrastructure, rather than chip availability, were becoming the main constraints on expanding AI computing capacity.
“I think people are starting to realize the constraint on deployment of superintelligence is more in power and cooling and infrastructure than it is in chips,” Musk said on the SpaceX earnings call.
Oppenheimer also highlighted Bloom Energy’s potential in carbon capture, citing management’s estimate of a $1 trillion total addressable market.
The brokerage said the concentrated carbon dioxide in the company’s anode exhaust could help simplify capture systems and reduce costs, potentially allowing tax credits under Section 45Q to cover a substantial portion of expenses.
The opportunity could eventually provide additional revenue streams through server sales and other offerings.
For now, investors must balance that longer-term potential against the immediate costs of expansion and the company’s ability to convert strong demand into sustainable cash flow.
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