Morgan Stanley sees this stock doubling on eventual data center deal

Shares in Bloom Energy could double if the fuel cell company wins a large deal to power data centers similar to the Three Mile Island nuclear plant restart , according to Morgan Stanley. The investment bank sees Bloom surging to $22 per share, compared to Monday’s close of $10.86, if the company signs a data center deal for 100 megawatts or more. Morgan Stanley expects such a deal to materialize by mid-2025. Constellation Energy ‘s contract to help power Microsoft ‘s data centers with power from Three Mile Island, south of Harrisburg, Pennsylvania, shows that tech companies are willing to pay a premium for reliable energy, Morgan Stanley analyst Andrew Percoco told clients in a note on Tuesday. BE YTD mountain Bloom Energy shares in 2024. Morgan Stanley values Constellation’s contract with Microsoft at $100 per megawatt hour, compared to the typical market price of about $50 per megawatt hour. Including grid charges, the prices rises to $130 per megawatt hour, according to the bank. Microsoft, however, is not actually building a data center at Three Mile Island. Rather, it is using the power from the nuclear plant to offset emissions from its data centers. This means the contract does not include an additional $75 per megawatt hour premium for directly powering these facilities, according to Percoco. Bloom, however, is positioned to capture a so-called “time-to-power” premium by directly supplying a major data center, according to Morgan Stanley. “While using a fuel cell would not provide the same immediate decarbonization benefits as [siting] at a nuclear power plant, it would provide a time to power benefit not captured in the CEG/MSFT deal at $130/MWh,” Percoco said. Morgan Stanley raised its price target to $22 from $20 in mid-August, 2024, and has rated Bloom Energy overweight since April 2023. — CNBC’s Michael Bloom contributed to this report.