Why it's time to sell Bloom Energy's stock after its AI-fueled rally

By Steve Gelsi

Jefferies downgrades Bloom Energy's stock to underperform, saying the rally since the power-generation deal with Oracle in July was a sign of 'overexuberance' by investors

Bloom Energy, which makes hydrogen electrolyzers, was downgraded by Jefferies after its stock more than doubled in the less than two months.

Shares of Bloom Energy Corp. have pulled back sharply this week, which may leave investors wondering if the magical ride of the past two months has ended. In the simplest terms, Jefferies analyst Dushyant Ailani says yes, it has.

Ailani turned bearish on the fuel-cell technology company's stock (BE) on Wednesday, saying the rally since the power-generation deal struck with Oracle Corp. (ORCL) in July has overshot the fundamentals of the company's business and its near-term growth prospects.

Investors may not be fully anticipating the risks Bloom Energy faces with the Oracle deal, he said, due to the unpredictable construction cycles of data centers that use its fuel-cell power products. The deal comes on the heels of the reported $300 billion contract that ChatGPT parent OpenAI signed to buy computing power from Oracle.

"Given the limited visibility into post-2026 growth and some early signs of overexuberance, we find that risks to the downside outweigh further upside at the current levels," Ailani wrote in a note to clients.

He cut his rating on the stock to underperform, after being at hold for the past year. His new $31 price target implies about 55% downside from current levels.

The stock closed Wednesday down 10.6% at $69.18, and has tumbled 19.8% since closing Monday at a record $86.27. At the record close, the stock had rocketed 221% since the Oracle deal was announced on July 24.

Read: Bloom Energy's stock is surging - and could ride Oracle's growth to even more gains.

While Bloom Energy stands out as a leader in this promising niche fuel-cell market, Ailani said believes the many bullish assumptions investors are making about the Oracle deal are facing "practical constraints."

For example, he believes Oracle's initial engagement with Bloom Energy is in the 15- to 50-megawatt range. But even at the top of that range, it would only imply $160 million in revenue for Bloom, he said, which is less than 10% of the current average analyst estimate for 2025 revenue compiled by FactSet of $1.76 billion.

Meanwhile, despite the rocket ride in Bloom's stock, Ailani's stance remains a rarity. Of the 25 analysts surveyed by FactSet who cover the stock, 12 are bullish and 10 are neutral, while just three are now bearish.

-Steve Gelsi

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09-24-25 1659ET