Green Investors Enjoy Huge Returns as Stock Market Powers Through Trump’s Attacks

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Tim Bachmann, a climate-tech portfolio manager at the fund management unit of Deutsche Bank AG, DWS, says investors should be prepared for another “Deepseek moment,” referring to the Chinese startup that stunned the world earlier this year after it unveiled a low-cost, energy efficient version of AI.

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The idea that it might be possible to power AI with considerably less energy than assumed in the US was “a shock not only in the data-center operators, but also in the suppliers of cooling, ventilation equipment, cables, transformers,” Bachmann said.

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Alex Monk, a portfolio manager for the global resource equities team at Schroders, says the alternative energy sector would likely be dragged down by a bursting AI bubble.

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Deirdre Cooper, head of sustainable equity at Ninety One Plc, says the Anglo-South African asset manager is being “careful to avoid the hype” around parts of the green rally. It’s clear that some clean-tech stocks have been “caught up in the speculative end of the AI trade,” she says.

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And Renaud Saleur, founder and chief executive of Anaconda Invest, a Geneva-based boutique hedge fund that specializes in the energy sector, says that some of the stocks that have outperformed are “not really the quality ones.”

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He also questions whether the insatiable energy needs of the data centers powering AI can ever be met. “The extra demand for AI is impossible to fuel,” Saleur says. The end game will be “a lot of disappointment.”

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The best-performing company in the S&P Global Clean Energy Transition Index is Bloom Energy Corp. The company, which makes solid-oxide fuel cell systems that can generate electricity where it’s needed, is up almost 500% this year. 

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Bloom Energy, which agreed in July to provide on-site power to Oracle Corp.’s AI data centers, is planning to double its manufacturing capacity by the end of 2026 to meet demand. And with the construction of new power plants proving slow, combined with a shortage of gas-fired turbines, Bloom’s fuel cells – which have a deployment time as short as 90 days – have generated considerable interest.

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“Their product is very much tailored and levered to the whole AI data center demand dynamic,” said Christopher Dendrinos, an analyst at RBC Capital Markets. “That has been a huge driver for the stock,” Dendrinos said.

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And because Bloom Energy’s fuel cells are — for now, at least — largely powered by natural gas, they actually benefit from Trump-administration incentives that didn’t exist under the Biden administration.

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But others urge caution. Analysts at Bank of America Corp. say Bloom Energy’s “fundamentals don’t justify” its share price gains, according to a September note sent to clients.

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Michael Tierney, Bloom’s head of investor relations, says the company’s valuation is based on both strong anticipated demand for electricity and an improving financial condition, including revenue that’s expected to climb more than 30% this year to almost $1.9 billion.

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“We’re not a startup anymore,” he said. “We have a significantly better balance sheet than in the past.” Tierney says that positions Bloom Energy for sustained growth, which is attracting investors.

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Many investors in green stocks will still remember seeing the sector sink at the end of the pandemic. And even after this year’s rebound, clean-tech equity indexes are far off the highs of 2020 and 2021, when interest rates were at crisis lows and Covid-19 lockdowns stifled demand for traditional sources of energy. 

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But this rally feels different, according to some of the biggest asset managers investing in the sector. 

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Natalie Adomait, chief operating officer for Brookfield’s renewable power and transition unit, says demand for low-carbon energy sources to power AI is strong, “not only because they’re cheap and abundant, but critically because they’re quick to bring online.”