Bloom Energy Shares Flash Caution Signs Amid Divergent Views

Bloom Energy US0937121079

Bloom Energy's extraordinary rally continues to capture market attention, with shares multiplying in value this year amid surging demand for AI-related power solutions. However, beneath the surface enthusiasm, concerning developments are emerging that suggest the high-flying stock may be approaching a critical inflection point.

A significant red flag has appeared from the institutional investment community. Legal & General Group Plc has dramatically scaled back its stake in the company, disposing of more than 1.1 million shares. This transaction represents an approximate 51 percent reduction in their position, indicating major players are capitalizing on the substantial gains seen throughout 2025.

With the stock closing at €95.43 on Friday and maintaining year-to-date advances exceeding 300 percent, the potential downside risk has become substantial. This strategic retreat by sophisticated investors suggests they view current valuation levels as unsustainable despite the ongoing market enthusiasm.

Analytical Consensus Fractures

Market experts are deeply divided on Bloom Energy's prospects. The investment case has become polarized between those betting on continued growth from hydrogen technology and data center demand, and skeptics who see dangerous overvaluation.

Bank of America maintains its "Underperform" rating on the shares, even as it slightly raised its price target. The bank's valuation remains dramatically below current trading levels, with analysts expressing concern that the stock price has become detached from fundamental business metrics. According to their assessment, the current valuation driven primarily by AI optimism doesn't align with the company's financial reality.

Strong Growth Meets Soaring Expectations

Recent financial performance has been undeniably strong, with third-quarter revenue expanding by more than 57 percent year-over-year, underscoring robust demand for the company's energy server technology. However, current market pricing appears to assume near-perfect execution going forward.

Heightened volatility in the options market indicates traders are bracing for potentially turbulent price movements. As December trading begins, a critical test emerges: can retail investors and optimistic funds absorb the supply being unleashed by institutional selling?

The substantial gap between current prices and analyst targets, combined with a relative strength index reading above 90 indicating extreme overbought conditions, makes new positions at these levels exceptionally risky. Market participants face a delicate balancing act between growth potential and valuation concerns.