Key Points
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Bloom Energy is becoming the go-to source for on-site AI power.
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Brookfield Renewable expects to invest billions of dollars in the coming years to expand its renewable energy platform.
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Energy Transfer is investing heavily to build new gas pipelines to support rising power demand.
- 10 stocks we like better than Bloom Energy ›
The world is about to enter an unprecedented period of energy demand growth. Artificial intelligence has immense power needs. Couple that with other demand catalysts, such as electric vehicles and advanced manufacturing facilities, and the world will need much more energy in the coming decades. Electricity demand in the U.S. alone could grow 60% by 2045, six times faster than it has grown over the past 20 years.
The coming power surge is driving me to boost my energy stock investments. Here are three I’d buy with my next $1,000.
Bloom Energy
Bloom Energy (NYSE: BE) is a leading developer of advanced fuel cells. The company’s technology is rapidly becoming the go-to choice for powering data centers. Data center developers can’t get enough of its fuel cells. Global investment firm Brookfield Asset Management recently expanded its AI infrastructure partnership with Bloom Energy to $25 billion, a five-fold increase from its initial $5 billion partnership last October. That follows a similar expansion by cloud giant Oracle, which will now deploy up to 2.8 gigawatts of Bloom’s fuel cells at its data centers to accelerate its AI infrastructure build-out.
These and other deals are powering robust growth for Bloom Energy. Its revenue surged more than 130% in the first quarter to over $750 million, along with a significant improvement in profit (operating income increased $91.3 million to $72.2 million). Bloom now expects to deliver 80% revenue growth this year, up from its prior guidance of 60%. It should continue growing rapidly as more companies deploy its on-site power solutions. Despite robust growth, Bloom Energy shares are currently 40% below their recent high, making its valuation much more attractive.
Brookfield Renewable
Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) is a leading global renewable energy platform. It operates hydro, wind, solar, and storage assets secured by long-term contracts with inflation escalators. That enables it to generate stable, growing cash flow to support its more than 4.5% yielding dividend.
The company expects to deploy $9 billion to $10 billion of capital over the next five years to grow its global platform. It plans to invest around $850 million per year to develop additional renewable energy assets, with the remaining funds allocated to acquisitions. These investments, along with rising power prices, should drive annual growth in funds from operations per share of more than 10%. That should support continued dividend growth of 5% to 9% per year. With its share price down nearly 25%, Brookfield has high-powered total return potential.
Energy Transfer
Energy Transfer (NYSE: ET) is a master limited partnership (MLP), an entity that sends a Schedule K-1 Federal tax form each year. It’s one of the country’s largest energy infrastructure operators, with assets spanning pipelines, processing plants, storage terminals, and export facilities.
The MLP is investing heavily to capitalize on the growth of gas power demand. It’s building several pipeline laterals to supply gas directly to data centers (including Oracle’s) and new gas-fired power plants. Additionally, it’s building several new large-scale gas pipelines to increase gas flow across the country, including the $2.7 billion Hugh Brinson Pipeline and the $5.6 billion Desert Southwest Pipeline expansion. These and other projects should fuel its growth through the end of the decade. That will give the MLP more cash to grow its high-yielding distribution (nearly 7% yield), which it aims to increase by 3% to 5% per year. Energy Transfer’s combination of income and growth should drive strong total returns for investors in the coming years.
High-octane return potential
The world will need a lot more energy in the coming years to support AI and other demand catalysts. That should drive robust growth for Bloom Energy, Brookfield Renewable, and Energy Transfer. It’s why I plan to invest $1,000 into the trio in the coming month.
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Matt DiLallo has positions in Brookfield Asset Management, Brookfield Renewable, Brookfield Renewable Partners, and Energy Transfer and has the following options: short August 2026 $150 puts on Bloom Energy. The Motley Fool has positions in and recommends Bloom Energy, Brookfield Asset Management, and Oracle. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
