I’ve Been Taking a Beating on This AI Energy Stock. Here’s Where I’m Looking to Add More Shares – and Why.

Fervo Energy (FRVO) stock is up 29% today after the company announced a 396-megawatt (MW) power purchase agreement (PPA) with Google (GOOG) (GOOGL) to enable the continued development of the Cape Station enhanced geothermal systems (EGS) GeoCluster, expected to come online in 2028.

"As demand for reliable electricity grows, customers like Google need energy resources that can be deployed at scale, operate around the clock, and deliver where power is needed,” said Fervo CEO Tim Latimer in a press release. “This new PPA is part of our repeatable commercial model that enables us to meet customer needs and directly deliver clean, firm power to large electricity users.”

If you recall, Fervo was one of our highlights when it IPOed. It's now down over 50% from the debut price – typical of the IPO price cycle, especially when the company is pre-revenue and in a high-cash-burn phase. 

But Fervo might prove that its model is more durable than many overly hyped IPOs, and with this deal, Google is legitimizing geothermal power – because it checks a lot of boxes. With a renewable energy supply, data centers can be located far from densely populated areas and operate with a zero-carbon footprint. 

I'm long FRVO and taking a beating, but in investing, timelines are longer, and risk profiles are larger. That’s why I'm thinking about adding to my position on a price pullback. 

For investors with a similar mindset, any one of today's pivot levels could act as a low-risk, long-term entry point into FRVO, using the all-time low as a stop.

– John Rowland, CMT, is Barchart’s Senior Market Strategist and host of Market on Close.