Bloom raises full-year guidance again: demand broadens, but capacity expansion and cash flow remain constraints

Third guidance increase: where did results beat expectations?

Bloom’s third-quarter revenue was 1.236 billion dollars, 15% above market consensus; adjusted EBITDA was 299 million dollars, 27% above consensus. The company raised its 2026 guidance for the third time this year, lifting its revenue range to 4.4 billion–4.6 billion dollars. The midpoint implies year-over-year growth of 122% and is 9% above market consensus.
Profit growth and cash collection diverged: third-quarter operating cash flow was a net outflow of 27 million dollars, while market consensus and Morgan Stanley had expected net inflows of 165 million dollars and 101 million dollars, respectively. The report attributed the cash-flow pressure to working capital; the revenue and EBITDA beats have yet to translate into cash inflows.

Management said the order backlog is still growing faster than revenue and pointed to new demand from utilities, international markets, and commercial and industrial customers. Morgan Stanley believes the wider customer base reinforces the value of fuel cells beyond large cloud providers.
The connection for industrial customers is combined heat and power: the same equipment meets both electricity and industrial heat needs, a proposition the bank considers attractive for industrial processes. New orders in these areas over the coming quarters will be key to turning broader demand into incremental business.

Management laid out a path to manufacturing capacity exceeding 5 GW, supporting output growth to keep pace with demand. The company has signed a 12.5-year lease for a 158 thousand-square-foot facility, but the lease term has not yet begun; the new facility’s start-up date, capital needs and contribution to output remain uncertain.
The manufacturing ramp also limits near-term margin improvement. Despite the revenue beat and higher full-year outlook, the company maintained its gross margin guidance at approximately 34%; Morgan Stanley consequently lowered its 2027 gross margin forecast from 35.8% to 35.3%.
The bank still expects greater scale to drive long-term improvement, forecasting an adjusted gross margin of 39.7% in 2030. This thesis requires both capacity expansion and efficiency gains; near-term revenue growth has not brought a comparable increase in gross margin expectations.

Customer interest is growing in pairing fuel cells with carbon capture to provide near-zero-emission power. AEP and Google have announced an approximately 700 MW project in Wyoming whose fuel cells will have carbon capture and storage capabilities, providing an early commercial example of this application.
Morgan Stanley believes carbon capture can expand Bloom’s addressable market and increase revenue per megawatt. The company can extend its offering from equipment sales to complete turnkey solutions, but the project’s commercial structure and economics have yet to be clarified; the actual incremental revenue depends on the delivery model adopted.

Morgan Stanley raised its price target from 310 dollars to 335 dollars and maintained its Overweight rating, primarily on greater confidence in capacity expansion and the conversion of demand into deliveries. The bank raised its revenue forecasts for 2027 and 2028 by 25% and 20%, respectively, and its EBITDA forecasts by 29% and 21%, respectively.
The price-target increase was driven primarily by higher earnings forecasts: the new valuation implies a 2030 enterprise value/EBITDA multiple of 14.7 times, down from 15.9 times previously. A higher cost of capital from higher interest rates and a reduced near-term gross margin outlook offset part of the valuation contribution from delivery growth.