FuelCell Energy Plunges 22% as Plug Power Falls 12%, Raising Fresh Doubts Over Hydrogen Stock Rally

FuelCell Energy and Plug Power suffered sharp losses on Monday as investors pulled back from two of the most closely watched hydrogen stocks. FuelCell Energy shares dropped about 22%, while Plug Power fell around 12%, according to market coverage from 24/7 Wall St. The declines came after a powerful rally that had pushed hydrogen-related names higher on optimism tied to artificial intelligence data centers, clean energy demand, and improving company fundamentals.

Hydrogen Stocks Lose Momentum After Strong Rally

The selloff appears to reflect profit-taking after weeks of excitement in the hydrogen sector. FuelCell Energy had gained roughly 130% over the previous month, while Plug Power had climbed about 20% during the same period. Such fast moves often attract momentum traders, but they can also lead to sharp reversals when investors begin questioning whether prices have moved too far too quickly.

Hydrogen stocks have been helped by a broader market story: the rising need for reliable electricity to power AI data centers. As artificial intelligence grows, investors are looking for companies that can provide cleaner and scalable energy solutions. FuelCell Energy has tried to position itself inside that trend with an AI-ready data center power platform. However, Monday’s decline suggests that investors are now demanding stronger proof that this opportunity can turn into steady revenue and profit.

FuelCell Energy Faces Questions Despite AI Power Opportunity

FuelCell Energy’s recent rally was partly driven by enthusiasm around its new data center-focused platform. The company’s leadership has been highlighting the potential role of fuel cell technology in supporting energy-hungry AI infrastructure. Still, the company faces major challenges, including competition, revenue concentration, and pressure to prove that its growth story can support its valuation.

In its fiscal fourth quarter of 2025, FuelCell Energy reported revenue of $55.02 million, up 12% year over year. Its adjusted loss per share was also better than analysts expected. However, the company still carried a large trailing loss, and it recorded a $65.8 million impairment related to solid oxide assets during the fiscal year.

Another concern is Wall Street’s cautious view. According to the report, the analyst consensus price target for FCEL stood at $8.24, with no Buy ratings listed. That suggests analysts have not fully endorsed the stock’s recent surge. For investors, this gap between market excitement and analyst caution may be one reason the stock reacted so sharply when sentiment cooled.

Plug Power Falls Even as Margins Improve

Plug Power’s decline was notable because the company has shown signs of operational progress. In the first quarter of 2026, Plug Power posted revenue of $163.5 million, up 22% year over year, and beat analyst expectations on adjusted earnings per share. The company also improved its GAAP gross margin from negative 55% to negative 13%, helped by cost-cutting and better efficiency.

Management has set ambitious targets, including positive EBITDAS in the fourth quarter of 2026, positive operating income by the end of 2027, and full profitability by the end of 2028. These goals are important because Plug Power has long been viewed as a company with strong clean-energy potential but difficult economics.

Even after a major one-year rally, Plug Power remains far below its longer-term highs. The stock was still down about 87% over five years, showing how much damage previous losses caused. Monday’s selloff highlights the tension between short-term optimism and long-term investor caution.

Why Investors Are Reassessing the Hydrogen Trade

The hydrogen sector often moves as a group. When bullish sentiment rises, many hydrogen stocks climb together. When traders rotate out, the same stocks can fall together, even if their individual fundamentals differ. That appeared to happen Monday as FuelCell Energy and Plug Power both sold off sharply.

The bull case remains clear. AI data centers need large amounts of power. Clean energy demand continues to grow. Plug Power is improving margins. FuelCell Energy has long-term power purchase agreement visibility, including a Hartford PPA valued at about $167.4 million.

However, the bear case is also serious. Hydrogen economics remain difficult at scale. Many companies in the sector are still losing money. FuelCell Energy also has a $200 million at-the-market equity program, which can create dilution concerns for shareholders. When a company raises money by issuing more shares, existing investors may worry that their ownership stake will be reduced.

Key Catalysts Investors Are Watching

For Plug Power, investors are watching asset monetization and tax-credit-related developments. The report noted a $39.2 million investment tax credit sale expected near the end of May and a larger $142 million ITC sale linked to Stream Data Centers expected to close in June 2026.

For FuelCell Energy, the market will likely focus on whether its AI data center strategy can create real customer demand. Investors will want updates on project pipelines, signed agreements, revenue visibility, and margin improvement. Without clear progress, the stock may remain vulnerable after such a rapid rally.

Market Outlook

Monday’s drop does not necessarily mean the hydrogen theme is over. Instead, it shows that investors are becoming more selective. Stocks that rise quickly on future expectations often need fresh evidence to keep climbing. In the case of FuelCell Energy and Plug Power, that evidence may need to come from stronger revenue growth, better margins, firm contracts, and clearer paths to profitability.

Hydrogen remains a high-risk, high-reward sector. The long-term opportunity could be large, especially if clean power demand rises alongside AI infrastructure growth. But the near-term stock moves can be volatile. For traders and investors, the latest selloff is a reminder that exciting themes still need solid financial results.

Disclaimer: This article is for informational purposes only and is not financial advice. Investors should do their own research before buying or selling any stock.

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