Bloom reported a strong Q3 with revenue beating estimates by more than $90 million, strong margin expansion including GAAP operating margin shifting to positive territory. However, the reason the stock surged after hours was not found in the earnings report, rather the stock was up as much as 20% after hours from management commentary on FY2026 during the earnings call.
Bloom Energy has seen incredibly strong price action this year of nearly 400% YTD and is nearly 600% off the April lows. Therefore, it would take something unexpected to get the stock to soar after an earnings report – yet management delivered exactly that by stating: “As we have previously announced, we are doubling our capacity to 2 gigawatts by December 2026, which will support about 4x our 2025 revenue. That expansion is all systems go. Bloom's capacity will not be a bottleneck for our customers.”
Although management stated “about 4X our 2025 revenue,” a conservative approach would be to assume the revenue will be recognized across both 2026 and 2027. Analyst estimates are for $1.9B in 2025 and a mere uptick to 16.6% growth next year for revenue of $2.2B. However, helping the bull case further that last night’s comments offer alpha is that Bloom detailing further their primary benefit, which is quick time to power. Therefore, I imagine some of the “4X from 2025 revenue” from doubling the capacity will occur in 2026 and some will occur in 2027. I’m not choosy on which exact quarter given there is a wide disconnect in analyst estimates as 2027 estimates are for $3.5B, or less than 2X 2025 revenue.
The 2GW represents 100% growth in capacity as AEP had contracted for 1GW going into this year. My interpretation is that Bloom Energy must be able to charge more for its power given how rapid their solid oxide fuel cells are deployed with expectations of 90 days, yet they actually delivered in an astonishing 55 days for Oracle. In the past, management had hinted they were doubling GWs but did not correlate it to a quadrupling of their revenue. From Q2 earnings call: “Now our robust product has robust demand. We will double our factory capacity from 1 gigawatt a year now to 2 gigawatts a year by the end of next year. Our mission has never felt more urgent, and we are ready.”
Even with this blockbuster statement of “about 4x our 2025 revenue,” one has to wonder if 2GW is the baseline for 2026 capacity. The company counts one massive energy partner Brookfield, two hyperscalers and one neocloud as customers (ORCL, AWS via AEP and CRWV) plus they hinted of a fourth large customer on the call today via a gas company partnership. Secondly, management explained why their product is in high demand and will likely remain that way for some time. We cover this and more below!
Please note, we are shifting our post-earnings formatting to have the contextual information including Q&A commentary first and financials second.
“About 4X our FY2025” – The Comment that Caused the Stock to Surge
I want to double click on the comment that 2GW will be “about 4X our FY2025 revenue.” Surprisingly, the first few analysts on the call breezed over the comment before an Evercore analyst asked for clarity. I’m quoting this in full given the importance of the comment in the opening remarks with the CEO confirming the analyst’s understanding and stating, “we will never be the constraint in our customers growing their data center“ and that “all systems are go.” My translation is that Bloom can increase its capacity faster than many other energy options and now that “lighthouse” customers such as Oracle have taken note, that we will see what Bloom is truly capable of in the coming quarters. As Bloom’s CEO stated, commercial demand is “accelerating.”
Here is a further breakdown on the 4X comment:
“Nicholas Amicucci
Evercore ISI Institutional Equities, Research Division
I just wanted to build upon on kind of the doubling of capacity by the end of 2026 and kind of the commentary that would support 4x the fiscal '25 revenue.
How should we think about kind of the utilization on that capacity as we kind of enter into — again, as we enter into 2027 and we have that — the 2 gigawatts kind of up and running. I mean because if we're exploring opportunities to go beyond that 2 gigawatts, it seems like 4x full year '25 revenue, that seems like a big number that we could get there relatively quickly. So I just wanted to parse that out a little bit.
K. Sridhar
Co-Founder, CEO & Chairman
Yes. So here is a simple way to think about it, right? We didn't get to where we are today to deliver what I just explained, this purpose-built factory based on just meeting a market demand as we see it right now, we just prepared ourselves. What is the beauty of Bloom being able to expand its capacity and offer what we do? Is the return on investment like invested capital? So we are fiscally very disciplined, and we only make decisions based on that added cost and its absorption, will it have a great rate of return.
So we have a very disciplined process on this. And on top of that, we have a very clear understanding right now given time to power shortages and the importance of this as a nation-state issue for AI.
We are committing to strive and work as hard as we need to and stay ahead such that we will never be the constraint to our customer on growing their data center. That's what we are positioned for. And we will increase capacity. We will increase it in whatever steps necessary as we see fit. But as you saw, this 2-gigawatt capacity, all systems go based on that.
Would we use it for peak capacity? When we use it, will we use it for steady capacity? All that, you'll hear from us as we talk about our backlog and other things next year. But we are now using our OpEx wisely to invest in capability and talent to think about how do we expand beyond 2 gigawatts. That's all I can say right now. Thanks for that question.”
Regarding how fast Bloom Energy can build the additional GW, management was confident they can do so faster than anyone else: “Today, we are able to provide our power faster than most of the others who have supply chain constraints. We can expand our capacities a lot faster than anybody else.”
Why Bloom Energy Remains in High Demand Amidst a Crowded Energy Industry
We’ve covered Bloom’s products extensively, yet it doesn’t hurt to refresh our understanding of what makes the company stand out given the market dynamics around how data centers are scrambling to secure power is shifting nearly daily.
Our primary message has been “time to power” for Bloom, which management emphasized stating: “We are going to strive to make sure we are able to provide power for our customers before they are ready for it. We will not be the bottleneck. And we designed our factories; we built it with that in mind.”
Looking beyond speed, management also focused on price-to-performance, especially when they were asked how Bloom plans to compete with small-scale gas turbines with management stating a clear benefit to their solid oxide fuel cells (SOFC) is that hyperscalers can put out a lot more tokens with their fuel cells, stating: “With the same amount of gas that's available, same amount of space that's available, we can produce a lot more tokens for the hyperscaler than any other technology can today, end-to-end. And so the value for a hyperscaler is not about the cost of power. It's about that cost of the entire value chain across the board. So price-performance ratio, we can compete with anybody.” This was reiterated in the opening comments with management stating their fuel cells produce “10x more power in the same footprint than they did 10 years ago.”
It was also discussed that mechanical combustion solutions require a lot of batteries, whereas Bloom does not require batteries, implying that gas turbines are a band-aid solution compared to SOFCs, which can provide offer steady output without the grid or batteries.
Updates on Bloom’s Deals with Brookfield, Oracle, Hints of New Hyperscaler Customer
Earlier this month, Bloom shares surged more than 26% to $110 on the backs of a partnership with Brookfield, which will see the asset management firm invest up to $5 billion in Bloom’s fuel cell tech to be deployed at data centers worldwide. While timelines are rather unclear for deployment of the fuel cells, the two state that the partnership does include an AI inference focused site in Europe that will be announced before year-end. To put in perspective the potential size of the partnership, this would represent nearly 3x of Bloom’s estimated revenue for fiscal 2025.
Under the partnership, Bloom will become Brookfield’s “preferred on-site provider for Brookfield's trillion-dollar infrastructure portfolio of AI factories, data center operators, corporate facilities and factories.” What makes this partnership important is not only the fact that Brookfield has invested $50 billion towards AI and “is tripling the size of its AI strategy over the next 3 years,” but that Brookfield is willing to finance for Bloom.
CEO KR Sridhar explained that “if there are Bloom-sourced deals that require financing, so we can offer a customer a PPA, they are willing to step in and be the financier for that. It’s an inaugural investment.” This would remove an important layer on the equation for growth for Bloom as it would help them accelerate deployments without them or customers bearing the capital or financing risks.
Management also hinted of another hyperscaler customer in the works, but declined to provide any further details: “We signed our first deal with a major gas provider who will convert its gas to electricity with Bloom fuel cells and sell that on-site power to a third hyperscaler. The hyperscaler will announce details of this installation when it is ready.”
Bloom also struck a deal with Oracle back in July to deploy its fuel cells for onsite power at select Oracle Cloud Infrastructure (OCI) data centers over the next 90 days. While terms of the deal such as size were not disclosed, Bloom completed shipments in just 55 days, highlighting its ability to deliver power to data centers rapidly.
Bloom had signed a partnership with CoreWeave in July 2024, with the first fuel cells expected to be commissioned in Q3 2025 for a data center in Illinois. Bloom briefly updated on this, saying that its fuel cells are generating power at the facility. However, it is rumored that the data center is just 14MW, essentially making it a pilot/validation deployment rather than a full-scale commercial deployment.
Nvidia’s Rubin is Coming; Bloom Energy is Ready
There was discussion around how Bloom Energy’s solutions could become more attractive with the Rubin generation of GPUs with an analyst asserting DC/DC power would be more efficient than DC/AC power.
Our team has covered quite closely the power requirements for Rubin Kyber racks, which could draw 600kw or 5X that of the NVL72 systems that are shipping now. You can read more here on this topic (an important read if you are invested in AI energy stocks).
What was discussed on the earnings call is the power requirements will put immense pressure on voltage, stating: “the laws of physics dictate that you have to go to an 800-volt DC architecture if you want AI chips that have more power density, which is the only way you can improve upon AI in the next generation. This is not an if, this is not a nice-to-have. This is a must-have.”
Bloom is asserting they are prepared for the 800-volt DC architecture (whereas most energy solutions are not such as 50MW turbines) as they are adaptable when moving beyond the 48-volt DC architectures of today.
“That is the 48-volt DC because the small wire through which a small amount of water comes into the straw, that water was sufficient to satiate the thirst. That was when CPU racks were 13 kilowatts. We have put a lot of Band-Aids on it to make sure Blackwell chips that come somewhere near the 130 kilowatts can handle it through the straw […] We saw this coming one day. We didn't know what day in 2000 when we initially created architecture. We built an architecture where we can feed these straws appropriately right at that 800 volts, and we decided every unit we have shipped for the last 15 years has that.”
Bloom Q3 Revenue Beat of 21%
Bloom smashed analysts' revenue estimates by 21.3%. The company reported record revenue of $519.05 million, versus estimates of $428.07 million. Revenue grew by a solid 57.1% YoY and 29.4% sequential growth, accelerating 37.6 percentage points from the previous quarter’s YoY growth of 19.5%.
The company’s fourth consecutive record revenue was driven by the strong demand for its fuel cell technology, driving AI data centers. We have discussed the fuel cells opportunity as a key catalyst in our article here. The company’s fuel cells are very efficient and are currently producing 10x power within the same footprint than produced previously a decade ago.
The management highlighted three major tailwinds that are positioning the company to become a global standard for on-site power generation; a market expected to reach a trillion dollars. First, AI buildouts have increasingly made on-site power generation a core necessity. Secondly, since AI is a national priority, government policy on on-site power generation is now more liberal. Third, the company’s fuel cells are highly efficient and are witnessing double-digit YoY cost reductions.
Revenue growth decelerates in Q4 due to tough comps, as last year’s Q4 revenue grew by 60.4%. Analysts expect Q4 revenue to grow 6.4% YoY to $608.7 million. Revenue growth will accelerate to 20% in Q1 2026 and to 23.6% growth in Q2 2026.
Looking ahead, analysts expect 2026 revenue to grow 24% YoY and accelerate to 62% growth in 2027. Management sounded optimistic on the future growth as the company’s co-founder and CEO, K. Sridhar said in the Q3 earnings call, “This seminal year for Bloom positions us for an even stronger 2026 and beyond with higher growth and more profitability”.
The analysts' estimates would trend higher after management's comments during the recent earnings call that doubling capacity to 2 gigawatts would support 4x the company’s 2025 revenue. Using a conservative approach, we believe revenue may be recognized over the next two years.
Key Segments
Products, installation, and service revenue growth showed acceleration from the previous quarter. While Electricity segment declined sequentially.
- Products revenue grew by 64% YoY to $384.3 million, accelerating from the 31% growth in Q2.
- Installation revenue growth spiked 105% YoY to $65.78 million, accelerating from a (13%) decline in Q2.
- Service revenue grew by 16% YoY to $58.6 million, accelerating from the 4% growth reported in the previous quarter.
- Electricity revenue was down (25%) YoY to $10.35 million, decelerating from a decline of (10%) in Q2.
Margins Continue to Expand
Bloom’s margins are improving, primarily driven by operational efficiency, product cost improvements, and operating leverage. Bloom is fundamentally transforming into a stronger company, as its GAAP operating margins were previously deep in the red, in double digits.
- Q3 gross profits grew by 92.7% YoY to $151.68 million or a gross margin of 29.2%, up 5.4 percentage points YoY and 2.5 percentage points sequentially. Similarly, adjusted gross margins showed strong YoY and sequential improvement, primarily driven by product cost improvements and manufacturing efficiencies.
- Operating margins improved 4.4 percentage points YoY and 2.4 percentage points sequentially to 1.5%, primarily driven by strong operational efficiencies. Adjusted operating profits grew by 470% YoY to $46.2 million or an adjusted operating margin of 8.9% compared to 2.5% in the same period last year and 7.1% in the previous quarter.
- Net margin was (4.4%) compared to (4.5%) in the same period last year and (10.6%) in the previous quarter. Adjusted net income was $35.45 million compared to ($1.5 million) in the same period last year. Adjusted net margin improved 7.2 percentage points YoY and 1.3 percentage points sequentially to 6.8%.
Adjusted EPS beat of 47%
GAAP EPS came at ($0.10) in Q3 compared to ($0.06) in the same period last year. GAAP EPS was negatively impacted by a one-time loss related to unconsolidated affiliates of ($19.6 million) or a ($0.08) per share. The company reported adjusted EPS of $0.15, beating estimates by 47%, and was up from ($0.01) in the same period last year and $0.10 in the previous quarter. Bloom reported strong profits growth driven by operational efficiency, product cost improvements, and operating leverage.
Analysts expect adjusted EPS of $0.31 in Q4 and $0.04 in Q1. Looking forward, adjusted EPS is expected to grow strongly by 84.7% YoY to $0.93 in 2026 and 122.4% to $2.07 in 2027.
Cash Flow and Balance Sheet
The company reported positive operating cash flows and free cash flows in the recent quarter after negative cash flows in the first two quarters of the year.
- Q3 operating cash flows were $19.67 million or 3.8% of revenue compared to ($69.5M) or (21%) of revenue in the same period last year. Operating cash flow improvement was primarily driven by higher profits and working capital improvements.
- Strong operating cash flows also led to higher free cash flows. Q3 free cash flow was $7.4 million or 1.4% of revenue compared to ($83.8 million) or (25.4%) in the same period last year.
- While management has not provided concrete 2025 guidance, it noted on the earnings call that “we expect fiscal 2025 to be better than our previously stated annual guidance on our financial metrics”. It suggests that the company’s cash flows and free cash flows would be strong in Q4, based on management's guidance during Q2 results that cash flows would be at the same level as in 2024. To give a perspective, the company reported operating cash flow of $92 million in 2024 and free cash flow of $33.2 million. Year to date, the company reported operating cash flow of ($304 million) and free cash flow of ($338 million), which means operating cash flow will be about $396 million and free cash flow will be about $371 million, respectively, in Q4.
- Cash was $595.1 million and debt of $1.13 billion at the end of Q3 2025. While debt remained unchanged, cash improved by $20.3 million from the previous quarter.
Conclusion:
We are in the era of “what you see is what you get” – meaning, those offering strong earnings reports right now are setting up for a strong runway as future generations of GPUs will only be more power hungry. There is far less speculation than there was at the start of the year when we first covered Bloom in terms of which energy solutions can answer the demands of the AI data center buildout. The test for investors will be figuring out how to hold-on while this market unfolds in the coming years.
We hope to help with all of the above from being early to the products and solutions driving forward this massive market, to carefully examining the financials for confirmation the company is delivering, and providing the technicals to help stay the course while also not getting too emotional during the highs and lows.
Our earnings season is off to a strong start, we have dozens of reports to cover for you alongside real-time trade alerts that do what few can offer – analyze the complex AI market yet also execute.
Regarding the flawless execution, I want to thank the team on this one: Knox, Damien and Royston. It’s been a pleasure to see the pieces come together, and we hope there are many more like it to come.
I/O Fund Equity Analysts Damien Robbins and Royston Roche contributed to this article.
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
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