We are short Bloom Energy (BE) and related derivatives. In the full report linked below we outline the reasons why we think the stock is not properly pricing in certain risks. We may at any time and for any reason exit or reverse those positions.

The AI build-out has been booming for nearly everything that touches a data center, and for much of it the enthusiasm is deserved: compute must be powered, cooled, and connected, and the firms selling those picks and shovels have watched their earnings prospects and valuations soar. But as adoption accelerates, undercapitalized sub-sectors—memory, substrates, physical power—are having trouble absorbing what amounts to a demand shock, and thus are attracting supernormal investor expectations and outsized share price moves. Solutions to alleviate these critical constraints that otherwise would never have seen the light of day are now not only being evaluated, but are being purchased at volumes that exceed their own capacity to deliver.

The investors swept up in this are best described as “Bottleneck Investors”: chasing constraints in the AI supply chain in the belief that there is multi-year visibility or an evolving moat in the new regime, with little understanding of the technology they are underwriting or the real limitations of what they are buying. While some bottlenecks may have an elongated upcycle and thus have further to go, a demand shock doesn’t typically lend itself to smooth sailing after it is alleviated.

There is one company whose bottleneck-induced upcycle is running straight into a supply wall, one that caps the revenue growth and earnings generation the market is pricing in, and when that becomes visible, the repricing should be severe.

Bloom Energy (BE) has been swept up as one of the bottleneck winners in the power sector. It makes on-site power that does not produce emissions thanks to its solid-oxide fuel cell (SOFC) technology, previously viewed as a science experiment. Now, given AI-driven demand and grid permitting bureaucracy, fuel cells look like an appealing solution despite sitting at the top end of the power-cost curve, with names like Oracle and Nebius booking gigawatts of capacity. The stock has run with additional fuel from retail following the “brand name” investors of this cycle who have what we call “Situational Awareness.”
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