Bloom Energy Trades at a 380x P/E Ratio. Here's What Has to Go Right to Justify That.
Bloom Energy has been caught up in the AI spending spree, but have investors pushed the stock too far?
Overview
For years, Bloom Energy (NYSE: BE) lost money as it worked to perfect its hydrogen fuel cells. Even as the technology improved, it still wasn't clear that there was a huge market opportunity. Artificial intelligence (AI) has dramatically changed the story. The only problem is that Wall Street is pricing in a lot of good news, with Bloom Energy's price-to-earnings ratio sitting at a shockingly high 380x. Can the business live up to investor expectations?
Bloom Energy's original focus was on developing a technology that would provide clean energy. The main byproducts of using hydrogen to produce electricity are heat and water. This is good, but not necessarily enough to make Bloom Energy a winner. However, the fact that the company's fuel cells can provide clean, remote, off-grid power has suddenly become very important. Artificial intelligence is a power-hungry technology, and the electric grid is struggling to keep pace with demand. Bloom Energy's hydrogen fuel cells enable AI data centers to come online more quickly.
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Originally published at www.fool.com.