Bloom Energy, Oklo Stocks Slide as Analysts Question Gains

Bloom Energy’S fuel cells can generate electricity on-site at data centers, hospitals, and other businesses. (Courtesy Bloom Energy)

Key Points

About This Summary

• Bloom Energy and Oklo, two energy stocks, dropped on Thursday, with Bloom falling 4.8% and Oklo down 9.3%.
• Jefferies downgraded Bloom Energy to Underperform, citing “euphoria over fundamentals” and a valuation of 73 times its expected 2026 earnings.
• Goldman Sachs initiated coverage on Oklo with a Neutral rating, noting its significant backlog but lack of finalized power purchase agreements and no expected revenue until 2028.

Doubts are creeping in for some of the most hyped energy stocks in the market this year. Bloom Energy and Oklo , two companies whose shares had more than tripled this year coming into this week, were down sharply on Thursday.

Bloom fell 4.8% and Oklo dropped 9.3% in early trading.

Even for investors who believe in the most bullish artificial intelligence sector scenarios and expect the technology to use an ever-increasing amount of power, the run-up in the stock prices for these energy companies is starting to look overdone.

Both companies are seen as likely beneficiaries of the growing power demand from AI data centers. Bloom makes fuel cells that look like massive refrigerators and can generate electricity on-site at data centers, hospitals, or other businesses. The cells run on natural gas or hydrogen, and can be deployed much faster than traditional power plants, which normally take at least five years to build.

Bloom has inked deals with Oracle and utility American Electric Power . But Jefferies analyst Ailani Dushyant worries that the stock is now trading on “euphoria over fundamentals,” he wrote in a note downgrading the stock to Underperform from Hold on Wednesday. The Oracle deal lacks details, and the AEP one may take longer to deploy than initially expected.

After its enormous run-up this year, investors are starting to question the company’s valuation. Trading at 73 times its expected 2026 earnings, the stock is much pricier than many better-understood AI-related names like Nvidia .

Bloom stock had already fallen by double-digit percentages on Tuesday and Wednesday.

Oklo is one of at least 80 companies around the world that plan to build new kinds of nuclear reactors. Only three pure-plays—one being Oklo—have publicly traded stocks in the U.S., giving the shares scarcity value. Shares have soared more than 1000% since the company’s initial public offering last year. Lately, some Oklo executives have been selling stock.

While Oklo has made preliminary agreements with several companies to potentially sell them electricity, investors are still waiting on final firm agreements.

“Importantly, Oklo has secured one of the largest backlogs among its small modular reactor peers, with a pipeline of deals totaling more than 14 gigawatts,” wrote Goldman Sachs analyst Brian Lee. “However, the company has yet to secure a finalized power purchase agreement (PPA) with any customers.”

Lee initiated coverage on the stock on Wednesday night with a Neutral rating and $117 price target, just below where Oklo was trading on Thursday. Oklo has no revenue, and Lee doesn’t expect it to start making any until 2028. Even as far out as 2031, he sees the company bringing in less than $300 million in revenue. With those financials, it’s difficult to support a $20 billion valuation, a level the company surpassed just a few days ago.

Oklo is also facing more scrutiny as its profile has grown. Sen. Edward Markey, a Democrat from Massachusetts, sent a letter to President Donald Trump this week raising concerns that Energy Secretary Chris Wright has a conflict of interest with regards to Oklo. Wright had previously served on Oklo’s board.

Oklo and a subsidiary were chosen by the Energy Department to build three pilot nuclear reactors, and Oklo is receiving highly-enriched nuclear fuel from a government lab for a reactor it’s building in Idaho. Markey says that the Energy Department is providing “enough [plutonium] for approximately 2,000 nuclear bombs” to the commercial sector, raising security concerns. And he worries that Wright is too cozy with Oklo. “Given Secretary Wright’s close ties to the company, Oklo’s nuclear projects present an appearance of impropriety,” he wrote.

The Energy Department didn’t respond to a request for comment. Oklo declined to comment.

Oklo had received some access to nuclear fuel through a competitive process under the Biden administration, when Wright wasn’t with the Energy Department. Wright divested his holdings in Oklo and left the board once he joined the Energy Department, according to Oklo.

Write to Avi Salzman at avi.salzman@barrons.com