Remain Bullish on AI Beneficiaries Like Bloom Energy

The AI spending race shifted into a higher gear during the Q2 earnings season, with Microsoft, Amazon, Alphabet and Meta reporting roughly $170 billion in capital expenditures (CapEx).

Microsoft reported $41 billion of CapEx, Alphabet spent $44.9 billion and raised its full-year CapEx forecast, Meta deployed $31.1 billion while maintaining its outlook, and Amazon led the group with $54.2 billion in property and equipment purchases.

The spending is also showing returns, muting much of the previous skepticism we’ve all grown accustomed to in recent years. Microsoft is monetizing enterprise AI, Amazon and Alphabet are benefiting from accelerating cloud demand, and Meta’s AI-enhanced advertising business is helping fund its infrastructure buildout.

The spending surge creates a powerful demand tailwind across the broader AI infrastructure supply chain, with companies like Bloom Energy BE sitting in a pretty spot as data centers increasingly need near-term power.

Bloom Energy Reports Record Results

Bloom Energy delivered rock-solid results in its earnings release, easily beating our consensus expectations. The company posted record quarterly revenue of $1.07 billion, surpassing the $1 billion milestone for the first time ever and translating to a massive 166% year-over-year increase.

Growth has been driven by soaring demand for its solid-oxide fuel cell systems, as major U.S. hyperscalers and AI data center operators seek reliable on-site power. Additionally, BE is set to join the S&P 500 in the next quarterly rebalancing near the end of September, a major positive for the stock’s near-term action as index funds adjust their portfolios around the rebalance.

The stock sports a Zacks Rank #1 (Strong Buy), with EPS expectations remaining on a bullish trajectory across the board.

Bottom Line

Investors have hundreds of billions of reasons why to remain bullish on the AI buildout, particularly for companies like Bloom Energy BE, which represents a big beneficiary of increased power demands.

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This article originally published on Zacks Investment Research (zacks.com).

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