This week, Bloom Energy's share value dropped significantly by more than 20%.
Bloom Energy's shares took a hit this week, plummeting around 20% by 2 p.m. ET on Friday, according to S&P Global Market Intelligence. The decline came before the company's fourth-quarter earnings, scheduled for February 27th. A recent development has cast a shadow over investors in the hydrogen fuel-cell systems manufacturer, despite mixed analyst views on the hydrogen stock this week.
DeepSeek's Sting In the Tail for Bloom Energy
While some analysts have boosted their price targets for Bloom Energy stock, warranting optimism with potential market growth, others have grown wary. For instance, Piper Sandler's Kashy Harrison is bullish on Bloom Energy, with a new price target of $33 per share, driven by the company's strong position in high-potential markets like data centers. However, Bank of America analysts lowered their price target from $20 to $18 per share, following a tech sector rout spurred by DeepSeek.
DeepSeek, a Chinese AI startup, has released a low-cost AI model that is causing considerable concern among investors. Largely perceived as a threat to the AI landscape and the data center industry in the U.S., there is a widespread belief that DeepSeek could disrupt the market, potentially impacting Bloom Energy's solid oxide fuel cell systems. Data centers have become crucial for Bloom Energy's growth, as the technology giant serves the industry's energy needs and counts high-profile clients like Intel and Google among its customers.
Is it Time to Unload Bloom Energy Stock?
Despite the importance of data centers to Bloom Energy's growth, it's too early to jump to conclusions about DeepSeek's impact on the U.S. data center industry. It's a developing situation, and only time will tell how the AI landscape evolves.
Bloom Energy's revenue projections of $1.4-$1.6 billion for 2024, totaling a record $1.3 billion in 2023, also gives reason to pause before making hasty decisions. It's not uncommon for market sentiments to shift, but Bloom Energy's strong foundations in diverse industries, including manufacturing, utilities, and retail, offer resilience to such fluctuations.
In essence, while future developments with DeepSeek remain uncertain, it's advisable to monitor Bloom Energy's management's discussions on the issue during their Q4 earnings call in February. Until then, there's little justification for panicked selling of Bloom Energy stock.
Investors might be reevaluating their finance strategies with regards to Bloom Energy, given the potential impact of DeepSeek's AI model on the data center industry. With DeepSeek posing a threat to Bloom Energy's solid oxide fuel cell systems, some investors are considering diversifying their investing portfolios or waiting for more clarity before making significant moves in the finance market.
As Bloom Energy prepares for its fourth-quarter earnings, analysts and investors will be keenly watching for any financial implications of DeepSeek's low-cost AI model. Such insights could potentially influence future investment decisions in the finance sector.
