Shares of Bloom Energy (BE -2.29%) plunged on Wednesday and were trading 10% lower as of 1:30 p.m. ET.
With the hydrogen stock surging a jaw-dropping 990% in one year after accounting for today's sell-off, it had become extremely stretched on valuations and looked ripe for a correction.
Today, though, a wild drama unfolded, sending Bloom Energy stock tanking.
Image source: Getty Images.
The curious case of the Cheyenne project
The bullish thesis for Bloom Energy is heavily tied to the artificial intelligence (AI) data center build-out, which requires massive amounts of stable, uninterrupted power that Bloom's solid-oxide fuel cell servers can deliver. The company, for instance, recently extended its partnership with Oracle to supply up to 2.8 gigawatts of fuel cell systems for the tech giant's AI projects.
A Bloomberg report on Tuesday stated that Crusoe Energy has paused development of a 1.8 gigawatt (GW) data center in Cheyenne, Wyoming, at the "request" of a customer. Crusoe develops data centers for companies like Microsoft and OpenAI.
Here's how it all ties back to Bloom Energy: the company was selected to supply its fuel-cell systems for the first phase of the Cheyenne project. When the 1.8 GW facility was announced, there were claims that it was designed to scale to 10 GW.
In short, any pause, delay, or termination of such projects poses a direct risk to Bloom Energy's pipeline and revenue potential. That is why the stock plunged today.
But, wait.
Something interesting just happened that Wall Street is overlooking.
NYSE: BE
Key Data Points
In a statement this morning, utility giant Black Hills (BHK +0.99%), which is providing grid infrastructure for the Cheyenne project, confirmed that it hasn't been paused. Although Crusoe is no longer developing the project, Black Hills says it is now working directly with the large-load customer and expects the project to begin by early 2028, as planned.
What does this mean for Bloom Energy stock?
So what does all of this mean for Bloom Energy? If the unnamed customer remains committed to the Cheyenne project as Black Hills says, there's no loss to Bloom Energy.
However, the development highlights a risk that has increasingly concerned investors: a potential slowdown in AI spending. When a high-profile project suddenly changes course, even if it remains active, investors begin to question whether more data center developments could face delays or hurdles.
These are exactly the kinds of days when pricey stocks like Bloom Energy, that are purely riding the AI wave, take a big beating.
