Flowers bloom below wind turbines in fields near Palm Springs, Calif. Global renewable energy capacity expanded by 15.5 per cent last year.Ashley Landis
For investors betting on a rebound in renewable energy stocks, 2026 is looking up. The sector has roared back, driving popular clean-energy funds to within earshot of record highs of five long years ago.
But hold on, eco-capitalists. Your optimism may rest on the performance of a single stock: Bloom Energy Corp. BE-N, a fuel cell maker whose fortunes are tied to data centres driving artificial intelligence.
The stock’s gains over the past 12 months are an eye-popping 1,400 per cent. Nothing wrong with that – except that the extraordinary rally may be distorting the clean energy rebound.
To be clear, the rebound is not confined to just this one stock.
U.S. President Donald Trump may have ripped up government incentives and imposed significant constraints on wind farms. But most of the rest of the world is pursuing an energy transition anyway.
Global renewable energy capacity expanded by 15.5 per cent last year, a pickup from 15.1-per-cent growth in 2024, according to the International Renewable Energy Agency.
Even though the U.S. is pursuing its own way on energy policy, global renewable power capacity – led by solar – should rise by more than 93 per cent by 2030, according to the International Energy Agency.
Heat waves and rising crude oil prices this year only strengthen the case for alternatives to fossil fuels, and renewed bullish enthusiasm for clean energy stocks is clear.
The iShares Global Clean Energy ETF ICLN-Q, an exchange-traded fund that gives investors one-stop exposure to dozens of companies associated with solar and wind power generation – and serves as a useful proxy for the sector – has soared 85 per cent over the past 12 months. It has outperformed the S&P 500 by 57 percentage points over this period.
A Canadian-listed fund, the BMO Clean Energy Index ETF ZCLN-T, has a similar track record.
In terms of individual stocks, Enphase Energy Inc. ENPH-Q, which makes solar microinverters, is up 119 per cent so far this year; First Solar Inc. FSLR-Q, the solar-panel manufacturer, is up 17 per cent; and Orsted A/S DNNGY, the Denmark-based offshore wind farm developer, is up 34 per cent.
This encouraging performance may be giving investors second thoughts about a sector that was hit hard between 2021 and the start of 2025, when rising interest rates and cost overruns walloped many clean energy stocks.
Bloom Energy now stands out as the sector’s brightest star, by far. The share price is flirting with US$300, up from US$18.57 a year ago – for a 16-fold return in just one year.
The company is now worth nearly US$84-billion, based on the combined value of its outstanding shares.
There are some very good reasons behind this spectacular run, and they largely support strong growth as AI data centres – and companies such as Oracle Corp. ORCL-N – turn to Bloom Energy’s fuel cell systems to expand their energy storage capabilities.
In the first quarter, revenues increased by 130 per cent year-over-year. And net earnings increased to US$70.7-million, up from a loss of US$23.8-million in the same period a year ago.
“The headline numbers, as strong as they are, are a lagging indicator and don’t convey the whole story. We, at Bloom, are ushering in the era of digital power for the digital age,” KR Sridhar, Bloom Energy’s founder and chief executive officer, said on a call with analysts last month.
But the stock’s lofty valuation is sure to raise a few red flags among investors worried about AI-related euphoria.
The stock trades at more than 20-times estimated revenues for the next 12 months, according to data from S&P Global Market Intelligence. It trades at a mind-blowing 127-times estimated earnings.
Dushyant Ailani, an analyst at Jefferies, believes that the valuation is “stretched.”
A broader concern: The stock is now the biggest component within the iShares and BMO clean energy ETFs.
Its weighting in these funds is now 12.7 per cent according to iShares data, up from 7.6 per cent at the start of the year.
S&P Dow Jones Indices, which administers the tracking index upon which these ETFs are based, responded to questions about this weighting with a detailed methodology that suggests Bloom Energy’s influence could remain high even if the weighting is capped at the next rebalancing.
All good if you’re enthusiastic about the emergence of AI, all-in on energy-intensive data centre rollouts and unconcerned about a possible equity bubble.
But if you have some reservations, the rebound in the clean energy sector comes with an asterisk: It is increasingly looking like a one-stock bet.