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Investing.com -- Bloom Energy Corp. (NYSE: BE) stock soared 8% Tuesday morning after Morgan Stanley significantly raised its price target on the fuel cell company, citing its growing potential in the AI data center power market.
Morgan Stanley analyst David Arcaro increased his price target on Bloom Energy to $85 from $44 while maintaining an Overweight rating. The new target represents substantial upside from Monday’s closing price of $67, and it is the highest price target on Wall Street.
The analyst’s bullish view stems from Oracle’s (NYSE: ORCL) recent announcement of massive bookings that exceeded expectations, with its backlog increasing by $317 billion sequentially to nearly $0.5 trillion. This development comes shortly after Bloom announced an agreement in July to power Oracle AI data centers with its fuel cells.
Arcaro believes Bloom is now "favorably positioned for success in powering AI data centers" amid extremely strong data center power demand. He notes that the market for power supply is quickly tightening, with both grid and alternative approaches facing longer delays.
A key advantage for Bloom is its manufacturing flexibility, with the ability to double capacity in less than six months and ship products on a short turnaround. The analyst highlights that the potential power shortfall exceeds 40 GW in the coming years compared to Bloom’s current 1 GW annual capacity, offering significant growth potential.
The analyst also raised his bull case to $185, representing potential upside of 175%, considering the possibility for Bloom to become "a much bigger player in the power landscape." Arcaro points out that every 50 MW of recurring demand (5% of current manufacturing capacity) offers approximately $5 per share in value for Bloom stock.
Traditional power suppliers are struggling to meet demand, with some utilities reporting 5-7 year wait times to connect new data centers to the grid, further strengthening Bloom’s competitive position.