Infineon vs. Bloom Energy: Which AI Power Stock Has More Upside?

What's up, guys? You're listening to Milk Road, and I want to tell you that today's video has actually aired before on our channel, but we thought that this conversation was so good that we should air it twice. So, this is a little excerpt from a past conversation. And just a reminder that if you want to see what our analysts are calling next across AI, stocks, and crypto, all of that is in Milkroad Pro at the link below. Enjoy the video. What does that increase look like for the power semis as this gets built out? as we make this migration to the 800 VDC. >> Yeah. So there two ways of how power semiconductors are going to win from this and from my opinion only one is actually priced in by the market now. So let's start off with the first one um that is priced in. As we're moving to much higher uh power density into those racks, the power that has to be converted and controlled increases by a lot. So, it's actually just a a volume story. You we just need many more power semiconductors as we're increasing the power density into those rack. And this is the story that is priced in um and and you can see that in the earnings of companies like uh onsemi or infinion because they already came out and showed the the the growth stories of of power semiconductors that they're selling into AI data centers. Um and and and there shows some some nice growth numbers there. So this is I think more or less priced in. What is not priced in is the 800vt DC story because this is changing what that that we're not only needing more chips but actually what kind of chips um so so shifting the the focus toward kind of higher value uh silicon and and and nitro chips um um that are used and or that are required to to to hold firm through through this higher power density So essentially from from an investor perspective, it's a mix upgrade. Companies that are focused on those specific power semiconductors can ask a higher price or or or sell higher value power semiconductors, right? And this mix upgrade um I think is not priced in yet because people don't understand 800 volt DC and what type of power semiconductors. So from from kind of an EPS or earnings per share leverage perspective, right? Um the suppliers um can grow their earnings materially faster than revenue um and can surprise to the upside from an earnings perspective because they they they shift their mix towards those higher value chips or power semis that are needed in in 800 volt DC. And >> when do you think that would start to show up? latest 2027. Um, okay. I mean, we're now starting with Nvidia shifting this, right? Um, and and and and with that, they need those higher value chips, right? This will obviously slowly scale, but from 2027 onwards when we're really moving moving to this, it's called the Kyber Rack architecture. It's basically the 800 volt DC architecture. Then really the and and and you can see it on the chart here, right? the the the step up and this is um a screenshot from the the onsemi one of the power semiconductor companies um they're basically selling that or saying that we're increasing the volume by 8x that that we can sell right um and that's a major argument um for for for those power semiconductors >> just going to pause there for a second to point out that the market is showing signs of something kind of different happening and our analyst at Milkro Pro are all over it. They spent the last couple weeks making a lot of trades, getting out of some positions, and then getting into a lot of new ones, getting ready for the next wave of robotics space, or even kind of picking some different AI winners. If you want to see what they have in their portfolios, what positions they're opening, it's just a dollar in Milkroad Pro at the link below. Yeah. And you've got it here like even just like the the per rack opportunity, right? um is that it's it's b it's almost yeah it's like an 8x on it where they're able to make 15k per rack but now that'll increase to 115k. So that's something where and that that will come online start to come online as as they make this shift later in the year as some of these will start to come online. >> Exactly. Yeah, that's that's going to happen. I mean me personally there there are many but maybe this is worth talking about as well uh and give some more alpha to to to people here. There are many power semiconductors company out there. I mentioned on semi there is infin and there like five to six others um that you that you can think of of of of buying here. Me personally, I like Infinian the most um because it's the most hidden AI play out of all of them. They have exposure to those higher value chips, silicon carbide and gallium uh nitrate. So, so SIC and GAN, they have that in their portfolio. So, they they're positioned for that 800 volt DC kind of uh step up. and Infinion is included in the Nvidia it's called MXG ecosystem basically the ecosystem around designing the 800 volt DC architecture so they're working with Nvidia to design how and which power semiconductors are required um in there and then one final point on of on Infinion Infinian has 50% of its business in kind of legacy nonAI sectors and and the rest is kind of exposed to AI in different forms. Um whereas other power semiconductors have all of their business in in um in in AI. The problem is those that have all of uh all of or basically selling all of the power semiconductors into data centers and and other AI businesses grid etc. their multiple is much higher and because Infinian is designing the wreck with Nvidia I think the surprise to the upside could be much bigger um in terms of expectations investor expectations and that's why I like the name >> right and Infinian just to kind of recap on them they I guess they had an all-time high in June along with a lot of other stocks but now now sitting you know 40% off all-time highs. >> Yeah. And you think that this and and again that this will this will start to show up especially because they're designing this with Nvidia that this is like a 2027 play right that this will start to show for them as an example as one of the companies that are part >> and there's and there's much more on Infinion. This is just power semiconductors for data centers, right? I I wrote the whole investor notes on Melro Pro on how they're exposed to the grid as well to the grid buildout which is core. How they are exposed to humanoid robots as well. They just bought a company there. So uh yeah, I I leave that to the Milk Road owners, but uh yeah, it's it's a really interesting company from my perspective and something that is not on the radar of many people. So, what the other play we want to talk about, which we've talked about many times, is, and you kind of alluded to it on the last one, is is basically a company that lets these data centers have access to DC power on the spot, right? Like just localized rather than needing to rely on the grid. >> Exactly. Yeah. It's it's it's Bloom Energy. Surprise, surprise. Yeah. I There are many different teases on the company. I'm sticking to the 800 volt DC one here. The bloom energy boxes provide energy in form of 800 volt DC. So if you're a data center operator, you have the choice of connecting the data center to your grid or you connect your data center to the grid. Um and then you need much more conversion steps to deliver the right form of energy to the rack. You can also choose Bloom Energy which natively provides 800 volt DC and then you need then you have just much less complexity in your data center and it's cheaper to operate uh because invid uh Bloom Energy meets the future standards of of Nvidia, right? It's a it's an it's another angle to the Bloom Energy story um versus the typical kind of scale speed to energy thesises that people know. Um, it's kind of a more hidden angle that I think people are underappreciating when talking about Yeah. Bloom Energy. >> And you think that they will be heavily relied upon as we go through this massive like power shortfall over the next couple years? Like that's what your chart on chart on the right here is kind of illustrating. >> Yeah, I mean I believe that and Morgan Stanley um agrees with me on that as well, right? They're saying Bloom Energy is supplying somewhere between 5 to 8 GAWW of energy, which does not sound much, but for Bloom Energy, it's it's it's massive. And they're saying that they they're saying it's it's coming through 2028. We have more or less end of 2026 now, right? Or let's say mid 2026. Today, they have only one gawatt of uh boxes that they can produce per year, right? Morgan Stanley is forecasting between 5 to 8 uh annual output production. So, you can see how they're scaling from here. You know, one thing we've talked about a lot on this show is that crypto is quickly becoming a huge part of the global payments infrastructure. And nowhere is that more obvious than in Asia. But if you're actually running a remittance company or a payment business, you know that the hard part isn't moving the stable coins. 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Like that's their advantage. which is not just that they can provide they don't need they don't rely on the grid is that they're already DC right like that's that's no it's not >> it's part of our story today that they're also 800 volt DC on top of everything else but it's not the core story to Bloom I just want to highlight that here you can cover Bloom from so many different angles there's so many bullish signs around Bloom so it's natively 800 volt you're you they're able to power a data center site within uh 60 to 90 days now even faster based on on on yesterday's news right uh where they said we're actually cutting down uh the time we can bring energy on site by another 40% right so we're down to what 30 to 40 days where they can bring power to a site um they're off the grid then you have the whole policy development saying that or in in Texas at the moment mainly right where they're saying if you do not have your own behind the meter energy solutions you you're not able to connect your data center to the grid, right? So, there a lot of different angles and 800 volt DC, which is the story of today's podcast, is just one of them. And and I want to I just want to make sure that people understand that. >> That's very helpful. These two companies, they seem intertwined. They seem to trade the same way, Vincent. So, how do you and how do you distinguish between them? I know we understand the the architecture side, like we understand how they are different, but it feels like they're kind of being traded the same way. So, how do you if you're weighing these two companies, how do you decide which offer is going to be more valuable or report kind of more earnings? Like, do you go Infinian because they're direct like Nvidia is literally working with them directly on their product? >> No, I think you can see from the multiples of those two companies that Bloom Energy is the much more valuable play here because power shortage is, as I said in the beginning of this podcast, the biggest bottleneck, right? And finan is providing power semiconductors which will increase a lot in value because we're moving to 800 volt DC but it's not the bottleneck number one. Right? So Bloom Energy remains the more uh kind of valuable play for the broader AI uh trade, but it's the much more expensive company. Of course, it's the much riskier play uh just in terms of stock valuation. Um and I think kind of from a riskreward perspective, especially uh Infinian down 15% over the last two or three kind of trading days is is more is is more interesting. It's a nice diversification play, right? It's it's it's it's lower risk. It's a really interesting entry price here. I did a a full model of the company where the stock price could be much much higher by 2028 again on the Melro Pro uh platform. Um so yeah that's that's how I view both of them. What are what is the downside of this 800 vault architecture coming out Vincent? There have to be some companies that are going to be losers or >> uh there has to be some kind of risk for these businesses cuz it it you know one thing we haven't talked about is like this is a huge architecture change, right? So there's not I it doesn't it must be more complicated than just flipping a switch. Thanks for listening to Milk Road. If you enjoyed the show, make sure you like and subscribe. And if you're struggling to find winners in the market, that's exactly what Milkroad Pro is built for. Our analysts have called some of the biggest winners early, and Pro lets you see what they're buying next, every trade they make, and the research behind every position. Check out Milk Road Pro at the link below. Everything you hear on Milkroad is forformational purposes only. These are our personal opinions, not financial advice, and we may own some of the investments we talk about. Always do your own research and make the decisions that are right for you. See you next time.