Bloom Energy (BE -13.91%) believes it is perfectly positioned to help power the development of artificial intelligence (AI). With a $2.5 billion backlog of fuel cells to deliver, the benefit is showing up right now. The company's recent deal with American Electric Power (AEP -4.20%) highlights the opportunity.

Here's what you need to know.

There's going to be one clear winner in AI

AI is still in its early days, and there are a huge number of companies looking to exploit the opportunity. That includes AI providers as well as companies that use it to enhance their business. It is too soon to decide on the companies that are going to be the biggest direct winners. But that doesn't mean you can't foresee the clear need for reliable power that AI requires to operate.

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If you don't mind a pick-and-shovel play, electricity is the vital resource that all AI companies need. And they need it fast and in large quantities. These two facts complicate the investment landscape.

From a basic level, increasing electricity demand clearly favors electric utilities. There will most certainly be a long-term benefit to the sector, but it takes time to build new power generation and time to build power lines. Ramping up for AI demand is likely to be a multiyear effort, or perhaps even a decade long in some areas.

And that's just the construction; regulated utilities also have to get government approvals for the spending, and environmental approval for the locations where they can build.

Bloom Energy is an elegant solution

This is where Bloom Energy comes in, since it makes fuel cells that are built in a factory setting. And they can be easily transported and then placed on site where they are needed. When that need is over, they can be moved to a new location.

That's a huge amount of flexibility that AI companies and utilities can take advantage of to bridge the gap between the need for power (happening now) and the ability of utilities to provide it (sometime in the future).

At the end of 2024, Bloom Energy said that it had a $2.5 billion backlog on the fuel cell side of its business. That backlog is being driven by AI to some degree, and that demand is likely to increase.

Notably, Bloom Energy signed a deal with the large electric utility American Electric Power (AEP) in late 2024 for 1 gigawatt of capacity worth of Bloom's fuel cells. At least 100 megawatts in capacity is expected to be delivered in 2025.

But what's really interesting here is that, according to Bloom Energy, it has so far signed a long-term service contract for every fuel cell it has sold. Those contracts last for 10 to 20 years and create a backlog of service work that is annuity-like in nature, versus the episodic nature of fuel cell sales. The company's service backlog totaled $9 billion at the end of 2024.

Simply put, Bloom Energy is providing a speed-to-market solution that is needed by both AI companies and utilities. That is supporting its backlog of fuel cells. And the ones it sells support its even larger service backlog.

AI is creating a positive cycle that could power the company to sustainable profits if it keeps going. On that score, it is in discussions with other utilities about deals similar to the one it inked with AEP.

A big opportunity for Bloom, and it is showing up now

The company's backlog is an important indication of what it may earn in the future. The larger the backlog, the more positive the outlook. AI is clearly helping to enhance that backlog, creating a positive demand trend in Bloom's business. The company's product, which is a quick solution to a growing power problem, suggests that there's more opportunity ahead for this well-positioned company.

Although the stock is up 80% over the past year, growth investors will want to keep an eye on the backlog because this story is likely to keep getting better. And if Bloom Energy has finally reached a point where it is sustainably profitable, which isn't an unrealistic expectation, there could be more upside from here.