The market is fixated on when Big Tech will generate economic value from the $650 billion+ being poured into AI data center expansion annually. The market is missing the point. Monetization has never been Big Tech’s weakness as explosive revenue growth and high margins have defined their businesses for decades. While execution risk always exists, these companies remain the world’s most reliable operators at scale.  

Instead, the real risk to the AI economy lies in the physical constraints of scaling these AI ambitions — not in compute availability from companies like Nvidia or Broadcom, and certainly not in Big Tech’s software capabilities, but in power availability, thermal management, and infrastructure that were never designed for this magnitude of demand.  

Nvidia’s GPU road map is bringing about an immediate need to overhaul data centers as most data centers today are incapable of powering the kilowatts required for rack-scale systems. Blackwell power requirements of 120 kW for the GB200s and 140 kW for the GB300s represents a 2X increase from the H200s 70kWs. As we look out over the next 1-2 years, it’s expected Nvidia will ship rack-scale systems requiring 300-600 kW – or a 5X increase from what was needed per system in the first half of 2025. 

Therefore, it is not enough to say the AI economy needs more power, but rather it needs power urgently. These are two entirely different matters; for example, the first could be supported by the expansion of nuclear power and the electrical grid, but the latter cannot. In fact, combining these two is something very few companies can do. 

This leads me to my Top Pick for 2026 – Bloom Energy.  

Bloom Energy offers onsite power generation through solid oxide fuel cells that are behind the meter to reduce dependency on the grid.  By providing behind-the-meter generation, Bloom reduces reliance on utility infrastructure and accelerates time-to-power for customers. An added benefit is the United States is the largest producer of natural gas, therefore, Bloom does not struggle to secure supply given the United States has large, well-developed gas supplies and pipeline infrastructure. 

The I/O Fund’s History on Bloom Energy 

We first covered the surging power demand from AI data centers in our June 2024 newsletter, AI Power Consumption: Rapidly Becoming Mission-Critical, with Bloom Energy quickly rising to the top of our list for its ability to solve the critical time-to-power constraint. From there, we drilled deep into this stock in early 2025 yet used technical analysis to hold off and wait for the April lows for our first entries. 

We made our initial buys at $16.64 and $17.04 in April 2025, helping position the stock as our biggest winner of 2025. During 2025, we held the position at allocations as high as 15%, with real-time trade alerts sent to our Members throughout the year. Today, the stock trades at $160.90, while many of Wall Street’s most renowned firms followed later in 2025 and entered at significantly higher prices. 

With that said, it requires strong conviction in not only Bloom Energy’s positioning but also the sheer pressure from AI’s primary bottleneck to believe the stock could see a repeat year of strong performance. Below, I lay out why I believe Bloom Energy is setting up to do exactly that. 

Chart showing Bloom Energy (BE) the I/O Fund's 2025 buy and trim actions, with green arrows labeled ‘Started Our Position’ and ‘Bought,’ and red arrows labeled ‘Trimmed’ during upward price movements.

Power is the #1 Constraint for AI Data Centers 

Before we drill deeper into Bloom Energy’s unique positioning, it’s well worth the time to revisit the mounting pressure in the AI energy bottleneck. Consider that companies like Microsoft and Meta are spending hundreds of billions annually on AI, with tens of billions allocated to Nvidia’s Blackwell GPUs.  

Any delay in powering these systems deepens both risk and market perception, as it not only pushes out revenue and profits but also extends the period in which Big Tech remains underwater on capex returns. A long timeline for power availability increases both timing risk and financial leverage.  

Competitively speaking, power availability is also an advantage as providers that can energize and deploy GPUs faster will have a meaningful head start over competitors stalled by power constraints. While the concept is straightforward, the stakes are immense, as it is not only the scale of these AI investments to consider but also the fierce competition to secure power can amplify the consequences of a delay.

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AI leaders are in unison this is the predominant challenge the industry faces. Commentary from executives at hyperscalers, neoclouds, Bitcoin miners, colocation providers and commercial real estate firms all point to power as a key constraint (and consideration) facing the market this year and next.  

CBRE said in its H1 2025 North America Data Center Trends Report that “power availability and infrastructure delivery timelines remained the most decisive factors shaping site selection, leasing activity and pricing across all major U.S. markets.” 

Equinix executives stated that “the amount of power we need isn't sitting around on the grid. And so we are planning, and I think most people in the room that are doing data center development are ensuring you have clear line of sight to that power before you take down any land or plan any data center capacity.” 

A survey by Bloom Energy of 44 hyperscaler and colocation developers found that availability of power was the number one consideration for new site selection, with 84% of respondents placing that in the top 3 with an average rating of 7.8 out of 10. 

Amazon CEO Andy Jassy said that “you see some of the constraints and they kind of exist in multiple places, [but] the single biggest constraint is power.” Microsoft CEO Satya Nadella said Microsoft needs “power in specific places so that we can either lease or build at the pace at which we want.” 

Google Cloud’s Thomas Kurian explained that “more powerful chips... take a lot more power. And power is, in many cases, a short resource.” Arm’s CEO Rene Haas has said that without improvements in efficiency, "by the end of the decade, AI data centers could consume... 20% to 25% of U.S. power requirements. Today that’s probably 4% or less." 

AI Data Center Power Demand Forecast for 2030: Projected to Surge 8,050% 

Data center power demand is expected to grow at an accelerated clip through the end of the decade and beyond, driven by the two main drivers of more powerful GPUs and surging growth in inference. 

In 2024, we had revealed that “Wells Fargo is projecting AI power demand to surge 550% by 2026, from 8 TWh in 2024 to 52 TWh, before rising another 1,150% to 652 TWh by 2030. This is a remarkable 8,050% growth from their 2024 projected level. AI training is expected to drive the bulk of this demand, at 40 TWh in 2026 and 402 TWh by 2030, with inference’s power demand accelerating at the end of the decade.” 

However, we have more data from the IEA that projects global data center power demand to more than double from ~415 TWh in 2024 to ~945 TWh by 2030 under its base-case scenario, or growth of roughly 530 TWh. The agency’s AI ‘lift-off’ scenario projects demand reaching 1,250 TWh, or growth of ~835 TWh, more closely aligning with Wells Fargo’s projection.  

Regardless of where AI demand falls relative to these projections, the trend and takeaway is rather clear – AI is set to drive data center power demand much higher by 2030. We can also look at this from a GW perspective, with numerous projections all pointing to substantial growth in data center capacity. 

Boston Consulting Group forecasts 45 GW of growth in global data center power demand in just three years from 82 GW in 2025 to 127 GW by 2028, with this more than doubling from 2023’s 60 GW.  

Overall, BCG expects generative AI power demand to rise at a 65% CAGR from 2023 through 2028, with AI training increasing at a 30% CAGR and inference rising at a rapid 122% CAGR. Under BCG’s scenario, gen AI will account for more than one-third of global data center power demand by 2028.   

Stacked bar chart showing global data center power required to meet projected computing demand from 2020 to 2028, rising from 43 GW to 127 GW. Bars display segments for GenAI, other AI + HPC, and traditional workloads, with CAGR rates shown for 2020–2023 and 2023–2028. 

On the other hand, McKinsey projects data center capacity will rise ~2.5x to 219 GW by 2030, up from a similar ~82 GW baseline in 2025. McKinsey projects AI training and inference demand to rise at a nearly 29% CAGR by 2030, driven by inference, rising at a 35% CAGR from ~21GW  to ~91GW. In total, AI would be contributing ~112 GW of the projected total 137 GW demand growth.  

This is quite a substantial amount of projected capacity growth over the next three to five years. But, more importantly, what level of capex does this require?  

Given our prior calculations for each GW to cost between $30 to $38 billion from the ground up (and now towards >$40 billion with Nvidia’s Blackwell Ultra), building out 112 GW of AI training and inference capacity by 2030 could necessitate as much as $4.3 trillion in capex.  

Looking more directly at the power side, and more specifically what Bloom’s TAM could be in the realm of on-site generators, Bernstein analysts estimate that generators and turbines could account for ~6% of capex per GW. This would equate to roughly $1.8 to $2.4 billion per GW, or in the long-term scenarios noted above with 112 GW of growth tied to AI, as much as $258 billion. BofA takes a more conservative approach at roughly ~2% of capex per GW, or ~$800 million, placing this 112GW forecast opportunity at nearly $90 billion. 

Why Bloom Energy Stands Out in a Crowded Energy Industry 

Time-To-Power Solutions for AI Infrastructure 

Our primary message has been “time to power” for Bloom, and the company continues to stand out for this very reason as it is finding strong product market fit in AI data center power needs. This is a key advantage as on-site power is becoming more of a necessity as grid constraints and connection timelines rise.  

As we had noted above, the industry is expecting to see significant demand growth over the next few years, yet the primary hurdle is that the grid is not able to keep up with such rapid demand in a short timeframe. For example, PJM (home to Data Center Alley in Northern Virginia as well as fast-growing data center markets in Pennsylvania and Ohio) fell short of its reliability requirements in the last two capacity auctions, with the most recent 2027/28 planning year, falling ~6.6GW short.  

A similar dynamic is unfolding in Texas, where ERCOT’s interconnection queue has reached roughly 226 GW as of mid-November, nearly quadruple the 63 GW recorded at the end of 2024. Of that total, approximately 165 GW comes from data center projects targeting approval by 2030, whereas ERCOT added only 23 GW of new capacity in 2024–25 — about 10% of the queued demand. 

This further validates Bloom’s positioning by enabling new data center projects to come online sooner with on-site, behind the meter power without sitting in interconnection queues for years at a time. Bloom has already proven that it can quickly establish data center power solutions in a rapid manner, completing shipments to Oracle Cloud Infrastructure in just 55 days of its 90-day delivery request.  

Its fuel cells are also fuel-flexible and can run on natural gas, biogas, or hydrogen, and provide continuous power with 99.9-99.999% reliability metrics. They are also modular in nature and can scale from 20 MW to 500 MW+, allowing flexibility in deployments and ease of scaling. Bloom is also continuously improving on price-performance, stating that its fuel cells have seen double digit YoY cost reductions each year for the past ten years, and a 10X increase in power production in the same footprint versus ten years ago.  

Bloom Energy vs. Gas Turbines for Data Centers 

Bloom also has an advantage over gas turbines when it comes to on-site power demand, as GE Vernova had stated in December that its gas turbines are sold out through 2028 with less than 10% remaining in 2029, meaning any new orders would not be delivered for another 3+ years. Nuclear has been floated as a solution to meet GWs of demand, though restarting facilities take years and SMRs are not expected to be commercially viable at scale until the 2030s.  

From Oracle to Quanta: Bloom’s Rapid AI Power Deployment  

Doubling capacity this year to 2GW gives Bloom an outlet to meet immediate-term demand from data centers throughout this year into 2027. 

A subsidiary of American Electric Power (AEP) had entered into a deal with Bloom in November 2024 for the purchase of 100MW of solid oxide fuel cells with the option to purchase 900MW more, for a total of 1GW.  

On January 4, AEP disclosed that its subsidiary had exercised a “substantial” portion of this option for $2.65 billion as part of its plan to develop and build a fuel cell power generation facility in Wyoming. This is rumored to be for Crusoe and Tallgrass Energy’s 2.7GW ‘Project Jade’ campus currently under development, said to be scalable to 10GW in the future.  

Bloom also quietly secured a major purchase order from AI server manufacturer Quanta Computer’s subsidiary QMN at the very end of 2025, with it buying three fuel cell microgrid systems for ~$502 million to provide reliable back-up power to its B16, B18 and B19 plants in California to ensure that high-value AI server manufacturing is not interrupted in times of inclement weather or wildfires.  

As a quick recap of some of Bloom’s prior deals, it had announced a partnership with Brookfield in October, which will see the asset management firm invest up to $5 billion in Bloom’s fuel cell tech and potentially finance deals for Bloom to be the preferred on-site power provider for Brookfield’s AI data center portfolio. This spans Brookfield’s $100 billion global AI Infrastructure program announced in November, in partnership with Nvidia and the Kuwait Investment Authority, which is aiming to build ‘AI factories’ on Nvidia’s Vera Rubin stack under Brookfield’s new cloud company Radiant.    

Bloom also struck a deal with Oracle back in July to deploy its fuel cells for onsite power at select Oracle Cloud Infrastructure (OCI) data centers, with Bloom serving as the first and second source of power for a single data center, with management hinting that this partnership is likely to expand over time.  

Financials 

2025 Revenue up 37.3%, 2026 Guided to Increase 58%  

Bloom once again delivered revenue more than 20% above analysts' expectations, with Q4 revenue of $777.7 million beating estimates by 20.5%. This represented 35.9% YoY growth, decelerating from 57.1% YoY growth in Q3; however, sequential growth was very strong at 49.8% QoQ, accelerating from 29.4% QoQ in Q3 – this is because Q4 is typically Bloom’s seasonally strongest quarter. The company announced its total current backlog at $20 billion, including $6 billion in product backlog, up 2.5X, and $14 billion in service backlog, up 1.5X. 

Bar chart titled ‘Revenue YoY’ showing Bloom Energy’s year‑over‑year quarterly revenue performance from Q4 2023 to Q4 2025, with Q4 2025 highlighted at +35.9% YoY, reflecting revenue growth to $777.7 million driven primarily by strong AI demand. 

Source: Company IR 

For the full year, Bloom reported record revenue of $2.02 billion, driven by significant AI data center growth and demand from commercial and industrial sectors. This represented 37.3% YoY growth. 

For 2026, Bloom guided for a sharp acceleration to 58% YoY at the midpoint of its guide for $3.1 to $3.3 billion, supported by its capacity expansion towards 2GW. This is a notable 24% beat over the consensus estimates and also would represent just 16% of its total $20 billion backlog.   

Product Revenue grew by 35% YoY and 66% QoQ in Q4 2025 

Products, installation, and service revenue growth remained solid in Q4, though electricity revenue continued to decline. 

Product revenue was $638.5 million in Q4, up 35.4% YoY and 66.1% QoQ, though YoY growth did decelerate from 64.4% as Q4 faced a much tougher, seasonally strong comp. FY25 product revenue increased 41.1% YoY to $1.53 billion.  

Installation revenue was $67.3 million in Q4, up 86.4% YoY, though this did decelerate from 105.2% growth in Q3. FY25 installation revenue increased 66.9% YoY to $204.1 million. 

Service revenue was $61.7 million, up 14.7% YoY, decelerating slightly from 15.5% in Q3. FY25 service revenue increased 6.9% YoY to $228.3 million. 

Electricity revenue did reaccelerate in Q4 but growth continued to decline. Q4 revenue declined (5.3%) YoY to $10.2 million, improving from Q3’s (25.1%) decline. FY25 electricity revenue was $60.3 million, up 14.2%.

Bar chart titled ‘Growth by Segment’ showing Bloom Energy’s year‑over‑year growth across Products, Installation, Service, and Electricity from Q4 2023 through Q4 2025. 

Source: Company IR 

Bloom Energy Q4 2025: Margins Rebound Sharply QoQ 

Bloom’s margins showed a sharp sequential rebound in Q4 but remained lower on a YoY basis. Full year margins showed expansion across the board with the exception of GAAP net margin, while GAAP operating margin moved a bit further into positive territory albeit remaining razor thin. 

• Bloom Energy’s adjusted gross profits grew by 10.2% YoY to $248 million with an adjusted gross margin of 31.9%, an improvement of 1.5 percentage points sequentially.  
• GAAP operating margin was 11.3% in Q4, up 9.8 points QoQ. Adjusted operating margin was 17.1%, an improvement of 8.2 points QoQ. Bloom noted that it continues to focus on reducing product cost and driving operating leverage, which will likely be much more visible in 2026 based on its current guide. 
• The company’s adjusted net profits grew by 13.1% YoY to $134.1 million with an adjusted net margin of 17.2%, compared to 20.7% last year and a significant improvement over 6.8% in the previous quarter. Bloom’s margins are improving, primarily driven by operational efficiency, product cost improvements, and operating leverage. 

Bar chart titled ‘Margins’ showing Bloom Energy’s adjusted gross margin and adjusted operating margin by quarter from Q4 2023 to Q4 2025, with Q4 2025 displaying 31.9% adjusted gross margin and 17.1% adjusted operating margin. 

Source: Company IR 

• The company’s 2025 gross profits grew by 45.2% YoY to $587.4 million. While adjusted gross profits grew by 44.9% YoY to $612.44 million with an adjusted gross margin of 30.3%, an improvement of 1.6 percentage points YoY. The strong gross margins were primarily due to product cost improvements.  
• FY25 GAAP operating margin expanded 2 points to 3.6%, remaining quite thin, while adjusted operating margin expanded 3.6 points to 10.9%, ahead of guidance for 8.6%.  
• Looking ahead, the company’s margins are expected to improve in 2026. Management guided adjusted gross margin to be 32%, an improvement of 1.7 points YoY. While the adjusted operating margin is expected to improve 3.2 points to 14.1% primarily due to operating leverage. 

2026 Adjusted EPS Guided to Increase 85% 

Bloom reported GAAP EPS of $0.00 in the quarter, though adjusted EPS saw a large 50% beat, coming in at $0.45 versus the $0.30 estimate. Analysts expect strong adjusted EPS growth in the coming quarters, with Q1 growth of 314.2% YoY to $0.12 and 153% YoY to $0.25 in Q2. 

Bar chart titled ‘Non‑GAAP EPS’ showing Bloom Energy’s quarterly adjusted EPS from Q3 2024 to Q4 2025, with values ranging from –$0.17 to $0.45. Q4 2025 adjusted EPS came at $0.45, beating estimates by 50% 

Source: Company IR 

For FY25, GAAP EPS was ($0.37), widening from ($0.13), while adjusted EPS was $0.76, increasing 171.4% YoY. For FY26, Bloom guided for adjusted EPS to be $1.33-$1.48, up 84.9% YoY at the midpoint and beating estimates by 25.5%. 

Turning to adjusted EBITDA, Bloom reported $146.1 million in Q4 for an 18.8% margin, down 6.9 points YoY but up 7.4 points QoQ. FY25 adjusted EBITDA was $271.6 million for a 10.9% margin, up 3.6 points YoY. 

Cash Flows and Balance Sheet 

Q4 is seasonally Bloom’s largest quarter for cash flows, with operating and free cash flow margins in excess of 50% this quarter, though this was much lower than the >80% margins it reported in Q4 2024. However, these large margins simply offset weak cash flows in the rest of the year, with full-year margins in the single-digit range.  

Operating cash flow was $418.1 million in Q4 for a 53.8% margin, down from an 84.6% margin in the year ago quarter. FY25 operating cash flow was $113.9 million for a 5.6% margin, down 0.6 points YoY. Bloom is guiding for operating cash flows to be ~$200 million in FY26, representing a ~6.3% margin at midpoint.  

Free cash flow was $395.1 million in Q4 for a 50.8% margin, down from an 82.7% margin in the year ago quarter. FY25 free cash flow was $57.2 million for a 2.8% margin, expanding 0.5 points YoY. 

Bloom reported $2.45 billion in cash and debt of $2.61 billion compared to $595.1 million and $1.13 billion in the previous quarter as Bloom raised $2.5 billion in convertible notes while also paying $975 million in existing debt in the quarter. 

Valuation 

Bloom Energy is trading at a P/S ratio of 17.1 and a forward P/S ratio of 12.7. The strong AI-demand led the company’s stock outperformance of 291.2% in 2025, and YTD return of 61%. As a result, Bloom Energy is trading at a premium to its average forward P/S ratio of 4.6. The company’s forward P/S ratio peaked at 17.7 on November 03, 2025, and is now 28% below that level. On the bottom line, the company is trading at a forward P/E ratio of 103.8.  

Chart showing Bloom Energy Corp. (BE) forward price‑to‑sales ratio from March 2025 to February 2026, rising sharply through late 2025 and currently trading at 12.70. 

Source: YCharts

Conclusion 

We are in the era of “what you see is what you get” - meaning, those offering strong earnings reports right now are setting up for a strong runway as future generations of AI accelerators will only be more power hungry.  

Bloom Energy has a compelling story, and after two decades, it appears like the stars are aligning for this alternative energy company. There is far less speculation today than at the start of 2025, when we first made our three initial buys, with two on the April 4th low at $17.04 and $16.64 for a 5% position. We then added another 3% on July 24th at $32.93, taking tactical gains in September as Bloom’s strong relative performance had made it one of the I/O Fund’s largest allocations at up to 15%. Bloom ended the year as one of the I/O Fund’s best performing stocks with an average return of 305%, with one entry returning 422%. The company’s customer base has expanded to six major accounts; margins are improving, and utilization of Bloom’s SOFCs has increased due to ongoing product enhancements all leading to strong price appreciation. 

Whether with Bloom Energy or the many other lesser-known AI stocks that my company has successfully identified early in their cycle, the test for investors will be figuring out how to hold-on while this market unfolds in the coming quarters (and years). 

We aim to offer support at every stage — from identifying products and solutions early in their cycle, to examining financials for confirmation that companies are executing, to breaking down technicals in our weekly webinars for a disciplined approach during market highs and lows. 

Since our inception in May 2020, I/O Fund has delivered a cumulative return of 326%— if we were a hedge fund, we’d rank #1 and if we were a tech ETF or Mutual Fund, we’d rank #3 in the United States.  

Being early to Bloom Energy and many lesser-known AI winners helped us to achieve these results. To get our Top 15 AI stocks, real-time trade alerts, weekly webinars and deep-dive research from a proven team in AI and tech stocks, Sign up now.

Royston Roche, Equity Analyst at I/O Fund contributed to this analysis.

Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.

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