Bloom Energy(NYSE: BE) has blossomed over the past year. Its advanced fuel cells have become the power solution of choice for energy-hungry data center developers. Robust demand for its offerings has powered a tremendous revenue surge, enabling the company to become increasingly profitable.
That has powered a blistering surge in thehydrogen stock, which has rocketed 1,470% over the last 12 months. As a result, it now trades at a rich valuation of 22 times sales and 135 times forward earnings. That’s a bit too rich for my liking. While I want to be a long-term investor in Bloom Energy, I don’t want to buy shares at the current lofty valuation. Here’s my strategy to buy shares at a lower price, or at least earn some income from the high-powered energy stock.
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Why I like Bloom Energy
Bloom Energy is emerging as a key enabler of the AI infrastructure boom. Data centers need a tremendous amount of power to run the compute infrastructure necessary to support AI applications. AI data center power demand in the U.S. alone could surpass 100 gigawatts (GW) by 2035, triple last year’s level of 31 GW.
Securing power is becoming a major bottleneck in holding back data center expansion. That’s leading large-scale data center developers to partner with Bloom Energy to help accelerate their development efforts. For example, cloud computing giant Oracle recently expanded its partnership with Bloom Energy to deploy up to 2.8 GW of fuel cell capacity to accelerate its AI infrastructure build-out. Meanwhile, Brookfield Asset Management formed a $5 billion AI infrastructure partnership with Bloom Energy late last year to deploy advanced fuel cells at AI factories (specialized AI data centers). As founder and CEO KR Sridhar stated in the first-quarter earnings press release, “Bloom is rapidly becoming the standard and ‘go-to choice’ for on-site power.” The company expects to grow revenue by 80% this year, an acceleration from its initial expectation of 60%.
Cashing in while I wait for a pullback
I missed the massive rally in Bloom Energy stock because I wasn’t sure whether it would fully capitalize on the AI data center power opportunity. However, it has quickly emerged as a leader in providing on-site power solutions for AI data centers. AI power is one of my highest conviction investment themes, which is why I’d like to add Bloom Energy to my portfolio.
However, I don’t want to buy shares at any price. That’s leading me to write put options to potentially buy the stock at a lower price while earning income. Due to the stock’s high volatility, I was recently able to write puts on Bloom Energy to buy shares nearly 50% below the current price while still earning an attractive options premium payment. If shares crash over the next few months, I can buy them at that much lower price or potentially roll my options contract forward for more income. Meanwhile, if Bloom stock is above my strike price at expiration, I should be able to write new options to earn more income. The biggest downside is that if Bloom Energy’s shares continue to skyrocket, I would miss out on those gains.
Earning income on a stock I like
I aim to keep about 10% of my portfolio in cash, half of which I use to write put options on the stocks I’d like to buy at lower prices. This strategy generates income on stocks I’d like to own if their prices come down, which I use to buy other stocks. Bloom Energy certainly fits this strategy. Its options pay very well, and it’s an emerging leader in one of my highest-conviction investment themes that I’d love to buy at a lower price.
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Matt DiLallo has positions in Brookfield Asset Management and has the following options: short August 2026 $150 puts on Bloom Energy. The Motley Fool has positions in and recommends Bloom Energy, Brookfield Asset Management, and Oracle. The Motley Fool has a disclosure policy.
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