FuelCell Energy: AI Data Center Push Likely To Remain An Uphill Battle - Hold

FuelCell Energy reported disappointing third-quarter results, with both sales and earnings per share coming in well below consensus expectations. Margins were impacted by the decision to sell the initial 30 MW tranche under the recent agreement with Fit Energy below costs. The company took advantage of the AI data center hype and raised almost $300 million in net proceeds from an underwritten public offering and additional open market sales. Subsequent to quarter-end, FuelCell Energy signed its first capacity reservation agreement with a major data center operator for a planned 75 MW project in Texas. Given the company's poor track record and inferior technology, I remain skeptical of FuelCell Energy's ability to successfully execute on the AI data center opportunity. However, with sufficient capital now at hand, I am reiterating my “Hold” rating on both the company's common and preferred shares.