In last week’s commentary, we briefly discussed the destruction and fire sale of a large, highly leveraged hedge fund portfolio called Situational Awareness that was run by a smart 20-something year old. The fund was eyeball-deep in the AI trade; long all the important inputs AI requires (mainly semiconductors), and short software stocks that were perceived to be doomed to destruction due to AI. When July came around, the only thing doomed to destruction was… Situational Awareness — and billions in clients’ capital.
In the Situational Awareness portfolio — along with all those technology longs and shorts — was a huge position in Bloom Energy (symbol BE). BE was in fact the largest disclosed long position in their public equity book. It was larger than SanDisk, CoreWeave, and many other direct AI plays. After the fire sale last week, that book now belongs to Ken Griffin of Citadel. What caught our attention is that a fuel cell company, not a chip designer or a cloud provider, sat at the top of the most aggressive AI portfolio in the market.
It is not surprising to us. In some ways it made sense. We have been discussing the energy demands of AI since February 2024, when we first wrote about what AI data centers would do to the electric grid; we mapped the landscape in Powering the Intelligence Revolution last May, and covered the nuclear renaissance in some detail. If you read us, you haven’t lacked good coverage of this theme. The bottom line is that widespread artificial intelligence adoption does not happen without new power supplies and infrastructure.
Explanations For Some Odd Stock Behavior
For sure, the Situational Awareness episode shined a light on some market excesses, but some of July’s AI stock selloff was due to people making a judgment about the large debts being incurred for AI capital spending. The tech sector volatility in recent months (to the upside and then to the downside) does look related to Situational Awareness. Reports have said that the fund started 2026 at about $3 billion, peaked at over $49 billion at the end of June, and then fell 67% in July after getting rocked by margin call after margin call. By July 30th, it had sold its remaining publicly traded position book to Citadel at a discount. In a way this was one young speculator (not using his name so as to protect the identity of a minor 😇) getting publicly taken to the woodshed for a bit of old fashioned “education” about leverage… by people who have been in the stock market business longer than he’s been alive.
Roughly $16 billion of listed AI-infrastructure stock changed hands in one block. What we do know is that Citadel was the buyer. Nobody outside the firm knows the price, discount or hedges, and the filing that would show any of it is not due until November. The precedents we can see in Citadel’s history cut both ways. Citadel absorbed Amaranth’s energy book in 2006 and Sowood’s in 2007 and worked them out rather than dumping them. But a firm that buys at a discount is, after all, in the business of monetizing it, and can do so by selling into precisely the strength we are all watching these first few days of August — or by hedging in ways that never appear as a sale. We’re not in the business of guessing what one large holder does next, but it is a factor we weigh as we look for entry points in a good theme. And we do still believe that AI and the adjacent energy theme remains a good one.
But We Digress; Let’s Get Back to the Subject of Energy
After languishing for years as a money-losing enterprise with interesting technology and potential, Bloom Energy’s share price went to dizzying levels after making data center announcements in 2025.
Bloom sells solid oxide fuel cells — ceramic devices that make electricity from natural gas without combustion. A gas turbine burns fuel, makes hot gas, spins a turbine that spins a generator, shedding energy at every step; a fuel cell skips all of it, running a ceramic hot enough to pass oxygen ions while forcing the electrons out through the wire. The consequence that matters most is not so much efficiency but siting. The units are modular, need no combustion permit, and can be running on a customer’s own land in months rather than the years an interconnection queue to the grid demands. One thing that makes Bloom interesting is it does not require turbines. Traditional turbines are needed in power plants powered by coal, natural gas, nuclear, hydroelectric, etc. Turbine order delivery backlogs from the world’s major manufacturers stretch into the next decade.
This letter is general commentary — the wide-angle view. It is not a portfolio. What we do for the families we work with is the opposite of “wide-angle”: we make portfolios built around one household’s circumstances, taxes, timelines, and appetite for exactly the kind of volatility described above. We keep that roster of clients deliberately small, because that sort of attention doesn’t scale. If you’d like to talk about what it would look like for you, Aubrey Ford will make the time.
Solar Is Also Turbine-Free and Fast to Deploy, But…
A large AI campus draws power at roughly a 95% “load factor”, i.e., it needs its 500 megawatts at three in the morning in January as much as at noon in June. Bloom’s solution is better at this than solar. Solar runs at less than 30%. Getting the same gigawatt load on solar panels alone would take several gigawatts of capacity, ten-plus gigawatt-hours of storage, and thousands of acres. Imagine a few city blocks of fuel cells… versus a solar farm larger than Manhattan. Bloom’s smaller footprint and modular, “non-combustion” version of providing firm capacity is why they have seen revenue grow to $1.07 billion in the second quarter from $401 million a year ago.
Even after the July share price decline, Bloom’s shares are very expensive based on traditional metrics. For contrast, let’s look at a cheaper player in the AI energy buildout — First Solar (symbol FSLR). FSLR is the only U.S. utility-scale module manufacturer, and it exited U.S. project development in 2021, selling the platform to Leeward Renewable. It now focuses on supplying solar panels that typically produce power in front of the meterthrough grid-connected projects under a long-term power purchase agreement. By contrast, Bloom is going to be providing power behind-the-meter. Comparing them is not apples to apples. Bloom Energy installations’ annual generation is still small, and some would say unproven at about 11,800 GWh. Meanwhile, First Solar’s cells provide over 192,000 in annual GWh production. FSLR’s Cypress Creek’s Steel River in Arkansas is the flagship — 2.5 gigawatts of solar and 2.9 gigawatt-hours of storage by 2029, all U.S.-made First Solar modules, with Google contracting the energy and Cypress Creek owning and operating the project. First Solar has roughly five gigawatts of recent announcements, about half tied to hyperscalers.
Room for Many Players
Nationwide, the behind-the-meter power plant announcements in 2025 ran to over 50 gigawatts, with perhaps 20% of that earmarked for solar-plus-storage.
BE’s solution provides better baseload (“always on”) power and a smaller footprint. FSLR’s solar can be brought up to production relatively cheap, but it does not work everywhere and needs to be complemented with another source or power storage. Being behind-the-meter means that Bloom can start getting paid before the building opens, whereas First Solar might only start to get paid when the grid interconnect catches up. Bloom is growing fast, but has detractors. A short-seller report of 8 July claimed that Bloom’s scandium supply (this rare earth is central to its technology) runs through China despite company disclosures to the contrary. The short seller also posits that scaling to five gigawatts a year would consume most of the world’s high-purity scandium supply. The company’s 8-K response rejected both the next day. We take no view on who is right in this fight. Nonetheless, their novel technology tells you why Bloom is getting big contracts.
So, while AI hyperscaler companies weigh their options and make their announcements, investors have options too. FSLR trades at about 10 times forward earnings, but is not growing nearly as fast as BE. Also, there are changing governmental policies (tax credits, tariffs, import, and price controls) that impact the perception of the solar sector’s longer term prospects.
Bloom Energy shares trade at about 50 times forward earnings estimates. Here’s another question that ought to concern anyone thinking of paying fifty times for a superior delivery schedule. What happens when the schedule advantage goes away? Bloom’s customers are not paying a premium for electrons. They are paying because a new gas turbine now carries a delivery date near the end of the decade and an interconnection queue can run longer still. Neither of those is a law of nature. GE Vernova, Siemens Energy, and Mitsubishi are all adding capacity, and a shortage is one thing capitalism can be relied upon to destroy. When turbine lead times normalize, Bloom will find itself selling firm power at a multiple of the capital cost per kilowatt against a rival solution that no longer makes the customer wait. Part of what the market capitalizes at fifty times earnings is a scarcity rent, and scarcity rents have expiration dates.
While Bloom’s growth and technology is exciting, their solution could shine a light on other new mineral bottlenecks. Scandium is the one in the headlines, but Bloom’s patent estate also runs through lanthanum, yttrium, cerium, ytterbium, samarium, and gadolinium, with chromium in the interconnects and nickel in the anodes — all of it consumed again each time a stack is replaced.
The Theme Is Still Good — Prices, Maybe Not Yet
Our view is that we like the overall theme of accelerating electricity demand. This is creating new innovative companies and technologies. The market gyrations are creating opportunities. Combining these two, we want to put our research and decades of investment market experience together to find attractive portfolio candidates. Keep doing the homework, build the buy list, and then use pullbacks like this past one to take advantage.
Energy for AI is one of many themes we monitor, and we have spent this letter on a few names inside it to share some high level thoughts. We work to understand the technology enough to know what a company is actually selling, and then bring decades of market experience to the separate question of what it’s worth and when to pay for it. This is just one theme of many, and this letter is a snapshot of a small part of the work — much more significant is how we put it into practice for each client’s different risk tolerance, needs, and goals.
Thanks for listening; we welcome your calls and questions.
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