(Bloomberg) — Oracle Corp. agreed to purchase as much as 2.8 gigawatts of fuel-cell power from Bloom Energy Corp. to supply data centers for artificial intelligence work.
An initial 1.2 gigawatts of capacity has already been contracted and will be used this year and in 2027 at Oracle projects in the US, the companies said Monday in a statement. A gigawatt is enough electricity to supply about 750,000 US households at any one time.
“The expanded agreement with Oracle is a clear signal that hyperscale AI demand is translating directly into gigawatt-scale,” Evercore ISI analyst Nicholas Amicucci said after the announcement.
Bloom shares jumped as much as 18% Tuesday, after closing at $176.67 in New York Monday. The energy company’s stock has more than doubled in value this year as data center demand has fueled an energy supply crunch. Shares of Oracle rose more 7% Tuesday from the previous day’s closing.
Oracle has embarked on a massive construction program to build AI data centers for such clients as OpenAI and Elon Musk’s xAI, and has said it expects to spend $50 billion on capital projects in the fiscal year that ends in May. The push into providing cloud services for AI companies generated revenue of $4.9 billion for Oracle’s infrastructure business in the quarter that ended in February.
Bloom relies on modular fuel cells that can be used to scale up a data center more quickly than relying on gas turbines alone, which can take months or years to put in place due to supply chain delays. Power is often the biggest chokehold on opening new data centers.
Oracle is expanding this relationship after Bloom delivered a fully operational fuel-cell system in 55 days, more than a month ahead of an anticipated 90-day schedule, the companies said in the statement.
America’s aging power system is strained by more extreme storms and now electricity demand growth that is poised to expand at an unprecedented clip. Increasingly, tech giants are paying to construct massive plants to provide energy directly to their data centers without connecting to the grid.
Separately Monday, Bloom announced that it had issued a warrant for Oracle to purchase about 3.5 million shares at $113.28 per share at any time until Oct. 9. Bloom originally disclosed the warrant last October.
–With assistance from Lauren Rosenthal and Brandon Harden.
(Adds Oracle share price and updates Bloom share price in fourth paragraph.)
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