A Different Aspect of AI’s Blooming Future
Artificial Intelligence revolutionizes the present and future as it spreads in every sector of the economy from security, entertainment, communication, science, medicine, and business replacing many daily tasks and increasing efficiency for thousands of various jobs. Although AI increases its reach over every industry, it simultaneously increases its need for processing power from chip companies like NVIDIA (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD), Intel (NASDAQ:INTC), and IBM (NYSE:IBM), all racing to get ahead.
Consequently, the progressive advancement of AI is heavily correlated with data dependence – by analyzing and accumulating massive datasets, required to train machine learning algorithms for AI systems. This big data then inherently requires larger storage capabilities, requiring a further demand for data centers from cloud providers like Azure (NASDAQ:MSFT), AWS (NASDAQ:AMZN) and Google Cloud Platform (NASDAQ:GOOGL).
Herein lies the obstacle: increased need for larger data centers, creates a further demand for energy.
CBRE reports, there is currently a global shortage of available power as it is constraining growth for data centers, since energy grids near data centers are already being maxed out. In the outlook, demand for electricity will continue to be bottlenecked by lack of infrastructure to support the continuous growth of data centers.
Therein lies the opportunity, as a different, notable data center that is energy sufficient, and more cost-efficient does exist – Bloom Energy from San Jose (NYSE:BE). BE creates servers right on site by using green energy through natural gas, biogas or even green hydrogen (renewable and less costly), for oxide fuel cells.
Limitations on the mainstream electricity supply could offer a big window of opportunity for Bloom Energy’s product, as revenue for the data center market is projected to grow to a market volume of US$410.40bn by 2027 from a 2023 revenue projection of US$342.10bn.
However, with a share price of $15.25 (Aug 31, 2023), Bloom Energy is riding quite close to a 52-week low, is still currently in the negative, with its operating income, and is yet to see a profit. Yet, since going public in 2018, it cannot be ignored that it has been seeing yearly growth in revenue consistently from $785Mn in 2019 to $1.19Bn in 2022.
Bloom Energy is yet to show its potential for investors. Although, with the future energy needs and policy changes, alongside AI adoption, Bloom could potentially emerge to thrive, though success on the road ahead is not promised.