A Short Seller Report Says China Could Kill This Key Data Center Supplier’s Growth

Bloom Energy (BE) makes solid oxide fuel cells for on-site electricity generation in data centers, and BE stock has delivered explosive growth over the past year. Governments worldwide want artificial intelligence (AI) companies to generate their own power without tapping into the grid. Bloom Energy is among the few companies in the tech sector that can help enable that.

However, Hunterbrook recently published a short report on the company. Called “Bloom's Big Lie,” the report alleges that Bloom Energy secretly depends on Chinese scandium, and that its scandium supply math can't support its growth targets, with the revenue coming from circular financing.

BE stock is down 15% in the past month, though most of the decline started in late June. Let's take a closer look.

Chinese Scandium Is a Big Problem for Bloom Energy

Hunterbrook's short report came out on July 8, and its centerpiece is that Bloom relies on Chinese scandium. Scandium is used in alloys, and China accounts for about 80% to 90% of the world's refined scandium chemical production and “effectively all metallized scandium used in advanced […] applications.” Thus, there's seemingly no way around China.

The contradiction stems from Bloom CEO KR Sridhar, who says that the company has “no China supply chain” and is “not dependent on China for scandium.” Hunterbrook says that Sridhar has made this claim at least five times since February 2025, even on earnings calls.

In April 2025, China added scandium to its list of materials requiring national-security export licenses. This means Beijing may essentially decide whether Bloom can sell. Scandium is not a minor product that Bloom needs for some side components. In fact, Bloom Energy is reportedly the largest single consumer of scandium in the world.

Hunterbrook says most of this scandium reaches Bloom Energy indirectly through other countries. “China can cut off that scandium supply regardless of how indirectly it flows to Bloom,” Hunterbrook argued in the report.

Bloom Might Hit a Wall Even With Chinese Supply, According to Hunterbrook

In addition to the Chinese supply issue, Hunterbrook believes there isn't enough scandium to satisfy Bloom's needs and meet its growth targets. The company wants to scale by a factor of 5 in gigawatts from 2026 to 2030. Per the report's model, 5 GW plus unit replacements would require some 220 tons of scandium oxide.

This volume constitutes nearly the entire projected global supply of roughly 240 tons, which Hunterbrook claims makes Bloom's steep growth targets commercially unattainable. Bloom would also have to compete with the rest of the world for this supply because total global demand is projected to reach 310 tons (including Bloom's own demand), much of which involves highly sensitive military hardware.

“Bloom alone needs roughly 220 tons of scandium oxide to meet Wall Street's 5 GW expectations,” Hunterbrook wrote. “But that’s against total projected global supply of only about 240 tons versus total global demand of about 310 tons, including supply locked up by customers like [Lockheed Martin (LMT)] (for the F-35 fighter jet).”

Finally, Hunterbrook argues that Bloom can't easily engineer its way out by using less scandium, because its own patents identify “too little scandium in the electrolyte as a cause of accelerated fuel-cell aging.”

Potential Roundtripping Allegations

According to the short report, in the fourth quarter of 2025, 74% of Bloom's revenue came from joint ventures Bloom partly owns with Brookfield (BN). What's more, for all of 2025, around 44% of Bloom's revenue came from “related parties.”

“What Bloom’s recent revenue growth shows is that Brookfield will finance Bloom’s production, not that a meaningful customer base has adopted Bloom’s fuel cells,” Hunterbrook wrote. “And it appears Bloom has been recognizing revenue well before its fuel cells have actually been deployed.”

Moreover, out of Bloom's unaudited $20 billion backlog, the audited remaining performance obligations were at just $492.6 million as of Q1 2026.

How Should You Play BE Stock Now?

Bloom posted a rebuttal to the short report, stating that it had sufficient scandium oxide to meet current fuel-cell demand and backlog, and that it was not dependent on China to scale and meet future demand growth. The company's 8-K filing was rather short and linked to another post on Bloom's website entitled “Demystifying Scandium Oxide: Why It Matters in Bloom's Fuel Cells.” That post argues that scandium isn't so rare and that it can be obtained from other sources.

However, you shouldn't mix "can" with "will." If scandium were so readily available, Bloom would have likely provided more information as to what it plans to do, plus further proof that it was sourcing from non-China sources.

Regardless, I wouldn't be fully bearish on BE stock just because of scandium. Bloom Energy isn't the only company that "indirectly" imports from China. Even U.S. defense contractors partially source from China, and it's practically unavoidable not to.

As far as supply goes, China itself may even be the solution. China can massively scale up scandium production, which isn't a big secret. Bloom Energy sourcing indirectly from China is more of a pro than a con if direct scandium exports to the U.S. are throttled.

Still, this risk requires some repricing, so I'd wait before buying the dip in BE stock.