Brookfield Quintupled Its AI Power Framework to $25 Billion. Bloom Gets the Opportunity, but Who Takes the Risk?

Brookfield Asset Management Ltd. and Bloom Energy Corporation have expanded their collaborative effort to power data centers using AI infrastructure from a $5 billion framework to an ambitious $25 billion. Brookfield, an investment firm, finances eligible deployments through its investment vehicles, while Bloom, a technology company, provides fuel-cell systems that generate power near the customer.

The partnership aims to tackle a significant challenge for data centers – the need for reliable power. By hosting power generation systems on-site, Bloom Energy reduces dependence on slow transmission projects, thus enabling data centers to obtain reliable power sooner. These systems are designed to scale up as the demand for AI continues to outpace the grid.

However, the $25 billion framework does not guarantee committed revenue. The success of these deployments depends on factors such as equipment costs, fuel availability, service obligations, and project-specific economics. Brookfield and Bloom will each bear different risks, with Bloom accepting manufacturing and performance risks, and Brookfield managing capital and underwriting risks.

The partnership represents an opportunity for both companies to diversify their economics and access long-lived infrastructure demand. However, investors should remain cautious and resist adding the framework ceiling to either company's backlog. Instead, they should focus on individual projects with disciplined underwriting and execution.

In the second quarter, hedge fund investments in both companies moved in opposite directions. Brookfield's ownership fell to 32 funds from 39, while Bloom's ownership rose to 116 funds from 91. Nonetheless, the framework still exposes both stocks to the risk of a headline maximum taking years to become funded assets.