Nvidia-backed AI company picks clean energy partner

“I think bloom is one of the most underrated ways to play.
“The theme is one of AI push,” Morgan Stanley analyst Andrew Percoco wrote.

Bloom, based in San Jose, California, makes solid-oxide fuel cells that work like batteries but last much longer. They run on a variety of fuels, including natural gas, biogas and hydrogen. They are packed into refrigerator-sized containers and run on commercial or industrial sites.

CoreWeave said it will use Bloom Energy’s fuel cells to power a data center in Illinois. CoreWeave’s announcement did not disclose the size of the order or how much electricity the fuel cells are expected to generate.

Bloom Energy chief commercial officer Aman Joshi wrote in an email that the order represents “a significant amount of electricity for CoreWeave to power high-density GPU workloads before waiting years for utilities to upgrade their services.”

He said the decision on what fuel to use for the cells is up to CoreWeave, which did not immediately respond to a question about which fuel it would choose.

AI companies face a dilemma: They want to scale quickly, but they need huge amounts of power capacity to run their machines. An AI query can consume nearly 10 times as much power as a simple Google search. AI companies, including giants like Alphabet and Microsoft,
,

We also want to use as much clean energy as possible to limit our impact on the climate.

Data centers used to train AI models could theoretically rely on different types of power, including intermittent sources like solar, but data centers used by consumers require 24/7 uptime that some clean energy sources can’t provide.

That’s one reason why clean-energy stocks have lagged other types of power providers this year, even as the rise of AI has increased demand for electricity.

But some analysts say fuel cells offer the reliability that AI data centers need, which has positioned Bloom to take advantage of rising electricity demand and made it one of the few clean-energy stocks in positive territory this year.

“The benefit of CoreWeave is that it can bring critical GPU services online years before public power is available,” Joshi wrote.

Some analysts had expected such an announcement.

“There’s a question of whether a company like Bloom can really deliver on the data center market,” Morgan Stanley analyst Stephen Bird said in an interview earlier this year. “We think that’s wrong. We think the company will close a big deal pack and the stock price will go up substantially.”

Fuel cells have other positive properties too.

“They are manufactured in the U.S. and can operate in a variety of configurations, including microgrid configuration, no grid connection, and grid parallel, avoiding interconnection delays when training models,” Joshi wrote.

CoreWeave may not be as well known as Microsoft, but it’s quickly becoming a major player in providing AI services through cloud-based professional services. With more than 45,000 Nvidia GPUs, the company has the scale to compete with cloud giants like Amazon.
.

The company has also raised billions of dollars in funding from Nvidia and major investment firms to expand its services.

CoreWeave has made a novel partnership to expand access to the electricity needed to run its servers, partnering with bitcoin mining company Core Scientific to host its servers.

“This partnership will enable us to provide our customers with unmatched performance and reliability while advancing our sustainability goals,” Brian Venturo, CoreWeave’s chief strategy officer, said in a statement about the deal with Bloom.

Contact Avi Salzman at avi.salzman@barrons.com.