Bloom Energy shares are experiencing a dramatic selloff following a series of critical assessments from major financial institutions. The stock came under intense pressure after market experts questioned its valuation, which had soared during the artificial intelligence market frenzy. The company’s narrative around providing power solutions for data centers now faces serious scrutiny.
Analyst Warnings Trigger Sharp Decline
Jefferies delivered the initial blow by downgrading Bloom Energy from “Hold” to “Underperform,” citing concerns that investor enthusiasm has outstripped the company’s fundamental performance. Particularly troubling to analysts was the limited visibility for growth beyond 2026. The firm’s price target of $31 per share suggested potential downside of 64% from the previous closing price. The market response was immediate, with shares plummeting as much as 15%.
The critical tone gained momentum when Bank of America reaffirmed its own “Underperform” rating. Though the bank raised its price objective from $21 to $24, this still implied a staggering 72% decline from the September 23 closing price of $86.27.
Should investors sell immediately? Or is it worth buying Bloom Energy?
Valuation Concerns Take Center Stage
Market researchers identified several key challenges facing the fuel cell technology company:
- Premium Trading Multiples: Bank of America noted the stock trades at significant premiums, with valuation multiples exceeding those of major technology companies despite demonstrating weaker revenue growth
- Intensifying Competition: Established power generation competitors are engaging in aggressive price competition, often offering superior pricing and reliability for data center clients
- Capacity Utilization Issues: Jefferies emphasized that even with recently announced major deals, Bloom Energy remains far from operating at full production capacity
Historic Rally Meets Reality Check
These recent downgrades represent a stark reversal from the stock’s performance over the past year, during which it had surged more than 650%. That remarkable advance was largely driven by optimism surrounding the company’s potential to supply fuel cell technology for AI data centers—a narrative bolstered by Bloom Energy’s agreement with Oracle. However, the current negative assessments appear to be outweighing previous investor enthusiasm.
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