Bloom Energy’s AI-Driven Rally Faces a Reality Check

The investment thesis for Bloom Energy, which has been heavily tied to supplying power for artificial intelligence infrastructure, is encountering significant headwinds. A major U.S. data center project, central to this narrative, now faces financing uncertainty, prompting investors to reassess the company's lofty valuation.

A recent sell-off in Bloom Energy shares was triggered by reports concerning a massive $10 billion data center development in Michigan, a project announced in collaboration with Oracle. Market intelligence now suggests that private equity firm Blue Owl Capital may not provide the anticipated funding as initially expected.

This development is critical for Bloom Energy. The company has been positioned as a key supplier of energy solutions for such large-scale facilities, forming a cornerstone of its growth story linked to the AI boom. The potential stalling of this flagship project introduces substantial uncertainty into that outlook.

This new risk emerges after a period of exceptional share price performance. Despite the recent pullback, the stock remains up more than 180% year-to-date and has gained nearly 190% over the past twelve months. However, trading at €65.10 (previous close), the price sits approximately 47% below its 52-week high from November, indicating a sharp correction is already underway.

Robust Fundamentals Contrast with Valuation Concerns

Operationally, Bloom Energy continues to post strong results. The company reported record third-quarter revenue of $519 million, representing year-over-year growth of 57.1%. Its earnings per share of $0.15 substantially exceeded the analyst consensus estimate of $0.08.

Despite this operational momentum, investor focus is increasingly shifting to valuation. At its peak, Bloom Energy commanded a market capitalization of around $33.5 billion, which has since corrected to approximately $21 billion. The central debate is whether such a premium valuation can be sustained if large, emblematic AI projects face delays or cancellation.

Should investors sell immediately? Or is it worth buying Bloom Energy?

Technical indicators reflect this growing caution. The stock is trading roughly 30% below its 50-day moving average and well under its 100-day level, though it maintains a positive gap of nearly 35% above the 200-day line. A Relative Strength Index (RSI) reading above 90 signals an extremely overbought or technically strained environment, further evidenced by a very high 30-day annualized volatility exceeding 110%.

Macroeconomic Headwinds Add Pressure

The stock's weakness cannot be attributed to a single project alone. Capital-intensive clean energy companies are broadly facing a challenging macro environment. Rising U.S. Treasury yields increase financing costs and make lower-risk assets more attractive. Additional uncertainty stems from trade policy and the regulatory landscape for clean energy.

For firms like Bloom Energy that require significant infrastructure and technology investments, these factors create substantial headwinds. This is reflected in broken chart support levels and a clear downward shift in price momentum, as market participants take profits and reduce exposure to highly volatile sectors.

Key Investment Considerations

• Project Risk: Uncertain financing for the $10 billion Oracle/Blue Owl data center initiative.
• Operational Strength: Q3 revenue of $519 million (+57.1% YoY) and EPS of $0.15, beating estimates.
• Valuation Shift: Market cap has retreated from ~$33.5 billion to ~$21 billion.
• Technical Picture: High volatility, a break below key moving averages, and an extreme RSI.

The AI Narrative Under Scrutiny

A growing skepticism regarding the pace of AI investments is also a factor. Bloom Energy had recently announced a separate $5 billion partnership with Brookfield Asset Management to power AI data centers, a deal intended to solidify its "AI energy play" status.

The doubts surrounding the Oracle project, however, are leading investors to scrutinize other similar agreements more rigorously. Concrete timelines, financing certainty, and execution are being weighted more heavily than announcements alone.

Consequently, the market is now pricing in a higher risk premium. Until clarity emerges on the funding for these massive AI infrastructure projects, Bloom Energy shares are likely to remain susceptible to heightened volatility, with their performance closely tethered to news flow concerning these mega-deals. The stock is increasingly viewed as a high-beta name, particularly sensitive to both positive and negative developments.