On April 13 local time, Oracle (ORCL) announced a strategic agreement with Bloom Energy (BE) to purchase fuel cell systems totaling up to 2.8 gigawatts, aiming to address the increasingly severe power demands of AI data centers. This “plug-and-play” on-site power generation model not only bypasses pain points such as slow traditional grid approvals and long expansion cycles but also significantly shortens the delivery timeline for computing power. The two parties have already signed an initial installation contract for 1.2 gigawatts. Additionally, Oracle has deepened its capital-level ties with Bloom Energy through warrants, ensuring a stable energy supply for the large-scale AI clusters it is building for core clients such as OpenAI and xAI.
Affected by this news, Bloom Energy rose more than 14% in after-hours trading, closing at $176.67 on Monday. Due to surging data center demand causing energy shortages, the company’s stock has more than doubled this year. Oracle rose nearly 2% after hours, closing at $155.62 on Monday, up 12.69% for the day, making it one of the top gainers in the S&P 500. However, from a year-to-date perspective, Oracle remains down about 21%, with a decline of over 50% from its all-time high, as the market continues to monitor the sustainability of its AI monetization capabilities.
Under this 2.8-gigawatt agreement, Oracle has demonstrated extreme distrust in the efficiency of traditional grid power supply. Due to the explosion in AI computing power, U.S. utility grids are facing severe capacity shortages and approval backlogs, with large data centers often waiting five to seven years for grid connection. Oracle CEO Safra Catz has repeatedly emphasized in recent earnings calls that power, rather than chips, has become the number one bottleneck for Oracle Cloud Infrastructure expansion. To address this, Oracle has chosen Bloom Energy’s solid oxide fuel cell technology, which allows power generation on-site at data centers using natural gas or hydrogen, enabling data centers that would otherwise take years to build to become operational in as few as 55 days. Oracle not only signed the initial 1.2-gigawatt order but also secured warrants to purchase approximately 3.5 million shares of Bloom Energy, transforming from a customer into a potential controller of the energy supply chain.
Oracle has initiated large-scale construction projects to build AI data centers for clients such as OpenAI and xAI, with capital expenditures expected to reach $50 billion for the fiscal year ending in May. The business of providing cloud services to AI companies has driven its infrastructure segment to achieve $4.9 billion in revenue for the quarter ending in February. At the Customer Edge Summit, Oracle also launched AI products such as Utilities Opower, which uses generative AI to analyze electricity consumption data, helping utility companies accurately predict loads and guide off-peak power usage, thereby reducing grid stress. This closed loop—”generating computing power with efficient energy, then using that computing power to optimize societal energy distribution”—was the core driver behind Oracle’s stock leading the market on Monday.
Oracle’s stock plummeted more than 57% after hitting an all-time high in September 2025, falling to approximately $138 by April 11. The sell-off in technology stocks and concerns over massive capital expenditures contributed to the decline. However, the company’s remaining performance obligations for the third quarter of fiscal 2026 reached $553 billion, a year-over-year increase of 325%. Overall revenue grew 22% year-over-year, with cloud infrastructure segment revenue rising 84% to nearly $5 billion. Despite high capital expenditures, Oracle reaffirmed its fiscal 2026 guidance and raised its fiscal 2027 guidance, projecting revenue of $90 billion in fiscal 2027. The current forward price-to-earnings ratio has dropped to about 18 times, with an enterprise value-to-EBITDA ratio of approximately 17.5 times, making valuations more reasonable than in the fall of 2025. Long-term investors should view this downturn as an opportunity rather than a threat.
