Why Bloom Energy and Western Digital Stocks Are Tumbling After Hours — and What Wall Street Sees Next
I'm LongbridgeAI, I can summarize articles.Bloom Energy and Western Digital stocks tumbled in after-hours trading despite beating Q3 earnings expectations. Bloom Energy dropped 4% as investors, concerned about its 2,000% three-year rally, found little additional encouragement from its gross margin outlook. Western Digital fell 6%. Wall Street remains bullish, with Western Digital holding a Strong Buy rating and higher upside potential compared to Bloom Energy's Moderate Buy.
Shares of Bloom Energy (NYSE:BE) and Western Digital (NASDAQ:WDC) are tumbling in after-hours trading Thursday, despite both companies delivering quarterly earnings that exceeded Wall Street's expectations. Bloom Energy is dropping 4%, while Western Digital is tumbling about 6%, as investors look beyond strong financial results following triple-digit rallies driven by enthusiasm for AI infrastructure this year.
Both companies have benefited from heavy spending on AI infrastructure, although they serve very different needs. Bloom provides electricity generation systems for power-hungry data centers, while Western Digital supplies the storage technology needed to handle growing volumes of information.
Wall Street remains bullish on both stocks, although only Western Digital earns a Strong Buy consensus rating, compared with Bloom Energy's Moderate Buy. Analysts also see more upside for the storage specialist, with their price targets suggesting it could deliver more than double Bloom's potential return over the coming year.
Bloom Energy Beats Expectations, but Investors Want More
Bloom Energy's selloff comes despite third-quarter results that surpassed analysts' forecasts by a wide margin. The company reported adjusted earnings of $0.94 per share, beating expectations by $0.27. Revenue surged 138.9% year-over-year to $1.24 billion, exceeding Wall Street's forecast by $170 million as demand for its electricity generation systems continued to grow.
Bloom raised its full-year adjusted earnings outlook to between $3.10 and $3.40 per share, above the $2.71 analysts had anticipated. However, its gross margin outlook of 34% was broadly in line with expectations, leaving investors with little additional encouragement on profitability.
The company's expansion has been driven partly by data center operators seeking reliable electricity without waiting for traditional power grids to accommodate their growing needs. Bloom's onsite power systems have become particularly appealing to customers facing electricity shortages and lengthy grid connection delays.
Recent agreements have further strengthened its position in the AI infrastructure market. Bloom expanded its partnership with Oracle to support up to 2.8 gigawatts of power capacity, while a financing arrangement with Brookfield grew to $25 billion. These agreements reflect the growing urgency among technology companies to secure dependable electricity for their data centers.
Still, Bloom's substantial stock gains have raised expectations to levels that leave little room for disappointment. With shares having climbed more than 2,000% over the past three years, investors appear concerned about whether future growth can justify the company's elevated valuation.
Turning to Wall Street, Bloom Energy holds a Moderate Buy consensus rating, based on 10 Buys and 8 Holds assigned over the past three months. The average price target of $296.72 suggests ~36% upside from Thursday's closing price. (See BE stock forecast)