GE Vernova’s New Business Looks Like Another AI Data Center Play

Bloom Energy, whose fuel cells are seen here, is a leader in the fuel cell industry. (Business Wire)

Key Points

• GE Vernova is developing fuel cell technology for commercialization within one to two years, with industrialization in two to three years.
• GE Vernova’s fuel cells use “thermal spray technology” for cost-competitive manufacturing at a larger physical scale.
• The fuel cell market leader, Bloom Energy, has seen its stock surge 260% this year, despite a 20% drop in the past five days due to new competition.

GE Vernova is developing a new business line, and it could shake up the market for artificial-intelligence data center power solutions.

The company said at an investor day last week it is working on manufacturing fuel cells, which are devices that operate a little like batteries to generate electricity. Unlike batteries, fuel cells are powered by fuels like hydrogen or natural gas that make electricity through chemical reactions. GE has been researching the devices for years, but now has a timeline for commercialization.

Fuel cells have been around for decades, and have even been used to power hydrogen vehicles for companies like Toyota , a nascent business that hasn’t really taken off. But they have started to catch on in a much different and more lucrative industry—AI data centers.

Fuel cell market leader Bloom Energy , the most prominent fuel cell maker, has inked deals this year with Oracle , utility AEP, and energy developer Brookfield Asset Management to use its devices to provide power for data centers. Bloom Energy’s fuel cells, which look like enormous refrigerators, can be used to power off-grid data centers, or give the centers backup power when the grid is strained. The stock market has come around to the technology, too, after years of so-so performance. Bloom stock has surged 260% this year.

Bullish investors think fuel cells can eat into the market share of the natural gas turbines that generate the largest portion of America’s electricity today. They’re considered cleaner than gas and coal plants, and more efficient than many of them. But there are few factories making fuel cells today.

GE Vernova has been developing its fuel cell technology for years at a facility in Malta, N.Y., a small town near Albany. But the company hasn’t started selling it. At the company’s investor day last week, however, CEO Scott Strazik said the fuel cells are getting much closer to deployment. He expects to be able to commercialize them within one to two years and industrialize the process in another two to three years.

It’s a product where “we see a very clear right to win in,” Strazik said. “It’s something we’re really ambitious about today.”

Strazik said GE Vernova is making its fuel cells in a different way than competitors. Most other companies use ceramic plates in the process to direct the electrons, but GE Vernova is deploying something called “thermal spray technology,” he said. Using that tech “we can manufacture fuel cells in a very cost-competitive way at a larger physical scale.”

A GE Vernova spokesman said the company has no further information to release on the business, including its size or potential revenue. The company’s stock has soared about 400% since it spun out of General Electric in 2024, because of its growing business making natural gas turbines.

Some analysts see the fuel cell business as an intriguing new opportunity for GE Vernova—though not one they can bake into the company’s earnings yet.

“This was a surprisingly popular area of investor questions,” Bank of America analyst Andrew Obin wrote Tuesday, after meeting with Strazik and other executives. Obin says GE Vernova’s previous research and development efforts mean it can get into the business without heavy development costs.

For fuel cell leader Bloom Energy, GE Vernova’s entrance is a mixed blessing. Shares are down 20% in the past five days, likely because of the new competition. But Bloom’s biggest institutional investor says GE Vernova’s entrance into the market also validates Bloom’s business. Fuel cells could eventually eat away at natural gas turbine sales.

“I think in the back of [GE Vernova’s] minds, they have to be worried about Bloom,” said Paul Wick, the lead portfolio manager for the Seligman Technology Group at Columbia Threadneedle Investments.

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