A Longtime Bear on FuelCell Energy Stock Just Turned Bullish. Here’s What Changed.

FuelCell Energy (FCEL) just got a vote of confidence roughly a week after its earnings report. Craig-Hallum reinstated coverage with a "Buy" rating and a $22 price target, well above the current $15.50. What's interesting is that the same firm dropped coverage of the stock back in early 2024. Its complaint then was a messy product focus and minimal product backlog. So a new "Buy" rating from a firm that walked away in the past means something. The reason for the change is the data center boom. Analyst Eric Stine sees FuelCell's molten carbonate technology as a strong match for powering AI data centers. It runs nonstop, powers a site directly, and gives reliable, steady electricity. Interest in on-site data center power is growing fast. Stine believes FuelCell now belongs in that conversation, with a clearer path to real product sales and, eventually, profits.

There's evidence behind the call. As I covered when FuelCell signed its Siemens deal, the company's path to profitability runs through large data center projects. Its latest quarter showed that shift is starting to happen. FuelCell landed its first data center order and a 75 MW capacity reservation in Texas with a major operator. Total committed and awarded capacity backlog climbed to $3.6 billion, and the company holds $737 million in cash to fund its expansion.

But the quarter also came with problems that shouldn't be ignored. Third-quarter revenue fell 29% to $33 million, and the company remains deeply unprofitable. Management doesn't expect positive adjusted EBITDA until late fiscal 2027. It also flagged that much of that $3.6 billion backlog is reserved capacity rather than confirmed orders. That means it isn't guaranteed to become revenue, and even the part that does may arrive later than expected.

FCEL stock has dropped about 53% from its 52-week high at the end of June. This shows how skeptical investors remain. The data center opportunity is genuine, but FuelCell still has to deliver on it.

FuelCell Energy is involved in the production of fuel cells intended for clean electricity generation. The company is a beneficiary of the data center and AI boom because of its ability to provide power quickly and in an environmentally friendly manner. It helps provide an alternative to the massive grid delays, which are currently the biggest bottleneck in data center deployments. The firm is headquartered in Danbury, Connecticut.