Two of the AI building boom’s biggest suppliers just posted blowout quarters. Wall Street is dumping them anyway.
Bloom Energy (BE), whose fuel cells generate power on-site at data centers, said Thursday that sales jumped 138% last quarter and raised its full-year outlook to roughly 122% growth. Comfort Systems (FIX), which installs the cooling and electrical systems inside them, said its backlog nearly doubled to $17.8 billion.
Both stocks fell hard for a second straight day Friday, with Bloom down 11% and Comfort Systems down 9%. Credo (CRDO), which makes networking parts for data centers, fell 9% with them.
“A company can deliver extraordinary numbers, but if investors aren’t willing to reward those results, something isn’t right,” Steve Strazza of All Star Charts wrote Friday morning.
Bloom did give the bears something to chew on. Its cash flow turned negative in the quarter, and its margins aren’t keeping pace with sales.
It’s not just 2 stocks
Since the S&P 500’s (^GSPC) Oct. 6 record close, the companies building and equipping AI data centers are down a median 23%, according to Yahoo Finance calculations. That group includes heavyweights like Caterpillar (CAT), GE Vernova (GEV), Vertiv (VRT), and Eaton (ETN).
Power producers are down 14%. Nvidia (NVDA) is off 11%. The Big Tech companies writing the checks are down just 5%.
In other words, the companies cashing the checks are falling harder than the ones writing them.
That’s backward for a build-out whose biggest problem is supply. “The biggest constraint right now for the AI build-out is power,” Jefferies’ Aniket Shah told Yahoo Finance on Wednesday, pointing to public pushback against new data centers. Even Nvidia CEO Jensen Huang said builders have to be good neighbors.
Apollo chief economist Torsten Sløk wrote this week that demand for computing power is “significantly greater than supply.” That means a slower build-out should actually help owners of scarce capacity, he argued, from power producers to transformer makers, where lead times run “up to 26 months.” The losers would be “developers and construction-stage investors” and AI stocks priced for everything to arrive on time. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)
The real risk, Sløk wrote, is that “scarcity unwinds” if supply catches up or demand softens. Now even his would-be winners are falling. That’s the market betting on the worst case.
Together, a dozen of the biggest builders and power names have shed more than $300 billion in market value since Oct. 6.
The order books don’t show any of that yet. Either the backlogs are wrong, or the stock prices are.
The next test comes on Wednesday, when Microsoft (MSFT), Alphabet (GOOG, GOOGL), and Vertiv report, followed by Amazon (AMZN) on Thursday. Their spending plans will show whether these backlogs keep growing, or whether the AI trade’s skeptics are onto something.
Internal AI tools helped analyze interview transcripts, research, and draft this post. Humans reviewed, edited, and fact-checked this post before publication.
Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.
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