Bloom Energy stock just formed a rare pattern: will it jump to $300 soon?

Bloom Energy stock has rebounded recently, moving from the August low of $157.2 to a high of $248 today. This rebound has coincided with the ongoing rotation back to AI companies and its strong financial results. It has formed an inverted head-and-shoulders pattern, pointing to more upside.

Bloom Energy is seeing strong demand

One of the top themes in the financial market this year has been the artificial intelligence boom that has led to a surge in data center deployments. This growth is benefiting most companies in the tech industry and their suppliers.

Bloom Energy has an important role in the industry because of its growing market share in the power generation sector. It has inked some major deals with the top data center companies like Nebius and Oracle. 

Last week, the company announced an expanded deal with MiTAC, which will use its technology to power its Fremont plant. MiTAC already uses the business in its San Jose facility. 

The most recent results showed that Bloom Energy’s business continued growing in the second quarter. Its revenue jumped by 165% to $1.06 billion, higher than what analysts were expecting.

The company’s gross margins expanded to 33.4% from the previous 26.7%, with its operating income jumping to $182.2 million. It had previously generated $185 million in operating income. 

Its quarterly revenue was notable as it was higher than what the company made in the four quarters of 2021. In a statement, KR Sridhar, its founder, said:

“Today, all the major US hyperscalers and over a dozen US neoclouds, AI labs, and colocation data center operators have validated and approved our power solutions for their AI factories. Bloom is now a standard for AI onsite power.”

Most importantly, the company boosted its forward guidance for the year. It expects to make between $3.9 billion and $4.2 billion this year, with the gross margin soaring to 34%. Its operating income is expected to be between $800 million and $900 million. Analysts expect its revenue to jump to $6.77 billion next year.

These numbers are helping to justify its hefty valuation, with its forward price-to-earnings ratio rising to 77. This multiple is much higher than the industrial sector segment of 23. Also, its forward price-to-free cash flow of 92 is higher than the sector median of 16.

The main risk facing Bloom Energy is that the AI supercycle starts to fade, which is highly unlikely to happen for now. Already, Nvidia has inked a deal that will see top financial companies in the US provide financing to its customers.

Bloom Energy stock has formed an inverted H&S pattern

BE stock chart | Source: TradingView

The four-hour chart shows that the BE stock price bottomed at $157 and then bounced back to the current $240. A closer look shows that it has slowly formed an inverted head-and-shoulders pattern, a common bullish reversal sign in technical analysis.

The stock is now hovering near this pattern’s neckline. It has also moved slightly above the 50-period moving average. Therefore, there is a likelihood that the stock will continue rising, potentially to the psychological level of $300.