San Jose-based fuel cell technology company Bloom Energy Corporation (NYSE:BE) saw its shares climb 5.1% to $241.72 on Monday morning, as investors reassessed the company's strategic partnership with Nebius Group N.V. (NASDAQ:NBIS) in the context of the AI infrastructure boom. The stock added $11.78 from Friday's close of $229.94, trading within a wide intraday range of $231.45 to $244.44 by 10:29 AM EDT.
The rally comes on the heels of Nebius's announcement that it has increased its 2026 contracted power target to 5 gigawatts (GW), up from previous guidance. Nebius, which is rapidly expanding its AI cloud operations, reported second-quarter revenue of $582.3 million, beating analyst estimates, and revealed that four new AI cloud contracts averaged more than $1 billion each. This demand for rapid, on-site power generation plays directly into Bloom Energy's value proposition of delivering electricity without relying on new transmission lines.
Contract Details and Financial Impact
The Nebius agreement, which was first announced earlier this month, covers a total installed capacity of 328 megawatts (MW), with a guaranteed capacity of 250 MW. Under the terms, Nebius could pay Bloom up to $2.6 billion in aggregate service fees over the contract's duration, which is structured in three phases, each with a 10-year supply term. A simple annualized calculation of these fees would amount to approximately $260 million per year, representing just 6.4% of Bloom's 2026 revenue guidance midpoint of $4.05 billion. It is important to note that this figure is illustrative and not company guidance.
Bloom Energy will be responsible for installing, operating, and maintaining the fuel cell systems, with the first phase of the 328 MW project expected to come online later this year. The guaranteed capacity of 250 MW represents about 76% of the total installed capacity, indicating a high level of commitment from Nebius.
Financial Performance and Valuation Concerns
The news follows a stellar second quarter for Bloom Energy, which saw revenue surge 165.5% year-over-year to $1.065 billion, driven by a 215.4% jump in product revenue to $935.4 million. Gross margin expanded by 668 basis points to 33.4%, while operating income swung to a positive $182.2 million from a loss of $3.5 million in the same period last year. The company also generated $226.4 million in operating cash flow, a dramatic turnaround from a $213.1 million outflow in Q2 2025.
Buoyed by these results, Bloom Energy raised its full-year 2026 revenue guidance to a range of $3.9 billion to $4.2 billion, and expects non-GAAP gross margin of approximately 34% and non-GAAP operating income between $800 million and $900 million. CEO KR Sridhar emphasized the company's growing role in the AI power sector, stating, "Bloom is now a standard for AI onsite power."
However, the stock's valuation remains a point of contention. At $241.72, Bloom Energy trades at approximately 16.7 times its 2026 sales guidance midpoint, a level that has some analysts questioning whether the market is pricing in too much optimism. The company's market capitalization stands at $67.72 billion, and its year-to-date return is an eye-popping 178.2%.
Analyst Sentiment and Risks
Wall Street is divided on the stock. Of the 19 analysts recently covering Bloom Energy, 10 rate it a Buy, 9 rate it a Hold, and none recommend selling. The average price target is $271.58, implying about 12% upside from Monday's quote. However, the range of targets is wide, from a low of $176 (Jefferies) to a high of $350 (RBC Capital), reflecting uncertainty about deployment timelines, margin sustainability, and the ability to execute on its pipeline.
Recent analyst actions include J.P. Morgan's Buy rating with a $314 target (August 3, 2026), Barclays' Hold with a $276 target (July 31), Mizuho's Buy with a $242 target (July 30), and Jefferies' Hold with a $188 target (July 30). The dispersion in targets underscores the risk that a headline deal like Nebius does not translate into immediate revenue, and that execution issues—such as project delays, permitting hurdles, or customer concentration—could lead to sharp volatility.
As Bloom Energy works to deliver on its Nebius contract and other AI-driven opportunities, the market's focus will shift to physical delivery. Investors will be watching for evidence that the 328 MW comes online as scheduled and that higher volumes do not erode margins. Until then, the Nebius deal serves as a powerful validation of demand, but the valuation leaves little room for error.
