Key Points
While the technology has been around for years, interest in hydrogen fuel cells has been minimal at best.
With data centers hungry for power, however, the AI industry is now exploring all of its viable options.
Evidence that the fuel cell business is reaching critical mass is starting to stack up in a big way.
After another big run-up early this year, Bloom Energy (NYSE: BE) is stumbling again. Shares are down nearly 40% from their late-June peak, in fact, suggesting investors still don't remain fully convinced that hydrogen fuel cells will play a prominent role in the energy industry's future.
It's becoming increasingly difficult to hold onto those doubts, though, given all the deals now being made between fuel cell makers like Bloom and electricity-hungry AI data centers' owners and operators. Case(s) in point: Just a few days ago, artificial intelligence data center company ECL inked a contract to deploy 300 megawatts worth of hydrogen fuel cells made by Sweden's PowerCell.
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Shortly before that, heavy equipment maker Siemens agreed to co-develop distributed energy solutions specifically for data centers with FuelCell Energy, just days after FuelCell Energy made a similar deal with Fit Energy USA.
For its part, late last month investment manager and project developer Brookfield announced it would be quintupling its initial $5 billion purchase of power infrastructure manufactured by Bloom Energy. That follows April's announcement that technology giant Oracle more than doubled the amount of power it initially needed from Bloom's onsite fuel cell power solutions, from 1.2 gigawatts to 2.8 gigawatts.
Read between the lines. Hydrogen fuel cells are finally entering the mainstream as an option for powering artificial intelligence data centers. Now that the proverbial floodgates are open, investors will have little choice but to notice the companies making the noise. With Bloom Energy, they'll not only find a company that's already profitable, but one expected to become increasingly so.
Data source: Morningstar. Chart by author.
Moreover, the fact that Bloom's solid-oxide fuel cells can also utilize natural gas or biogas clearly makes its tech uniquely marketable within a fuel cell market that Mordor Intelligence expects to grow an average of 37% per year through 2031.
In other words, the hydrogen fuel industry is at a tipping point. Nobody will be able to deny or ignore this by the end of the year. This, of course, lays a much firmer foundation for Bloom Energy shares.
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bloom Energy, Brookfield Asset Management, and Oracle. The Motley Fool recommends Brookfield Renewable and Siemens Energy Ag. The Motley Fool has a disclosure policy.