The AI buildout has turned memory chips into the year’s most crowded trade, and Micron Technology Inc. (NASDAQ:MU) has become its poster child with a roughly 740% one-year run.
Yet the two biggest winners of the same boom are hiding in the small-cap benchmark, and almost no one is watching.
Bloom Energy Corp. (NYSE:BE) is up about 1,118% over the past year, and Applied Optoelectronics Inc. (NASDAQ:AAOI) about 1,027%. Both have left the memory giant behind.
Why These Two Small-Cap Stocks Beat Micron
Bloom Energy sells solid oxide fuel cells that deliver on-site power in months, rather than the years it takes to clear a grid interconnection queue.
With hyperscalers starved for electricity, that pitch landed a $5 billion Brookfield partnership, a $2.65 billion American Electric Power agreement, and an expanded Oracle deal covering up to 2.8 gigawatts. First-quarter revenue more than doubled to $751 million.
Applied Optoelectronics makes the optical transceivers that shuttle data between AI chips.
First-quarter revenue rose 51% to $151 million as 800G shipments to a large hyperscale customer ramped and management guided full-year sales above $1 billion.
Bloom Is Now Too Big To Be A Small Cap
Bloom Energy is now the single largest constituent of the Russell 2000 with a market value near $77 billion.
It will not stay there.
FTSE Russell will move Bloom into the large-cap Russell 1000 when its semi-annual reconstitution takes effect after the close on June 26, ranking it among the index’s top 200 companies.
The Valuation Question
The exceptional gains have left both names priced for perfection.
Bloom trades at about 117 times forward earnings and Applied Optoelectronics at about 110 times — more than four times the Russell 2000’s roughly 25 times multiple.
Momentum has stretched just as far.
Bloom sits about 85% above its 200-day moving average and Applied Optoelectronics about 181% above.
Wall Street is not convinced there is room left. The median analyst target implies just 4% upside for Bloom and nearly 20% downside for Applied Optoelectronics.
What Comes Next
The next tests arrive when Bloom Energy reports after market close on July 30 and Applied Optoelectronics on Aug. 6. Both stories rest on one bet — that AI capital spending keeps accelerating.
The two biggest winners of that bet have already passed Micron. Whether they can defend valuations that price in years of flawless execution will be decided in the next earnings season.
Image: Shutterstock
