This Geothermal Stock Is Soaring Today After a Major Google Deal

Data centers are a hot-button issue in the U.S. right now. In the stock market, major tech companies are building artificial intelligence (AI) infrastructure to meet the massive demand for generative and agentic AI applications. But on Main Street, there’s growing resistance from communities who don’t want to see data centers in their areas, and are worried about the ever-growing power demand.

That’s why the new deal announced today by Fervo Energy (FRVO) and Alphabet (GOOGL) is so interesting. Fervo just signed a 396-megawatt power purchase agreement with Google to supply carbon-free electricity for a potential data center in Utah. The agreement is the largest enhanced geothermal power purchase agreement on record.

"This agreement reinforces that EGS [enhanced geothermal systems] is ready to power the next generation of computing infrastructure," said Fervo CEO Tim Latimer. "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."

The deal is for Fervo’s Cape Station project in southwestern Utah, which is expected to come online in 2028. Alphabet has the option to expand its purchase by 600 MW by June 2030.

Fervo and Alphabet have been partners since 2023, starting with a pilot project known as Project Red to deliver power to the local grid and Google data centers in Nevada. The partnership then expanded in 2024 with a deal that increased geothermal energy on the Nevada grid.

FRVO stock has spiked more than 28% today on the announcement news. Does Google’s partnership with Fervo suggest a possible pathway to solving the data-center energy problem? Let’s dig into this catalyst for Fervo Energy.

About Fervo Energy Stock

Based in Houston, Texas, Fervo is a geothermal energy developer. The company, which has a market capitalization of $4.5 billion, works to transform geothermal resources into clean energy to meet rising demand from AI hyperscalers and utilities.

Fervo Energy completed its initial public offering (IPO) in May, raising $2.2 billion in gross proceeds. But even taking into account Tuesday’s big gains, FRVO stock is down 26% from its IPO price and currently trading 53% off its all-time high.

The company reported only $113,000 in revenue in the second quarter while spending $226.5 million on capital expenditures to develop its Cape Station project. Fervo posted a net loss of $55.9 million and a loss per share of $0.38 in Q2.

Fervo also has a ridiculous-looking price-to-sales (P/S) ratio of more than 14,500 times as of this writing, but I’m not too concerned about that. The valuation will be extreme until it starts generating revenue, and deals such as the Google partnership should help turn those finances around.

In the Q2 report, the company announced plans to have 1.1 gigawatts of power developed by 2030, increasing its forecast by 100 MW. Fervo Energy’s development pipeline totaled more than 50 GW at the end of Q2.

For the second half of fiscal 2026, Fervo expects capex between $850 million and $900 million.

What Is an Enhanced Geothermal System?

Geothermal power plants use heat from beneath the Earth’s surface to generate electricity. By tapping into naturally occurring underground reservoirs of hot water or steam, plants can use wells to bring those resources to the surface and use the heat to drive turbines to generate electricity. The water can then be reinjected underground and reheated by the surrounding rock, creating a renewable source of energy that doesn’t rely on fossil fuels, and produces much lower emissions. 

Geothermal power is a more consistent clean technology than wind or solar power, so it’s capable of providing uninterrupted, continuous electricity that is required by data centers. While geological conditions can dictate where geothermal plants can typically operate, enhanced geothermal systems use specific technologies, such as horizontal drilling and hydraulic stimulation, to create or improve underground reservoirs of hot rock. The result may allow companies to produce geothermal electricity in areas without naturally occurring underground hydrothermal reservoirs.

“The next chapter of advanced power generation technology is being written in Utah,” said Google Head of Advanced Energy Michael Terrell. “This project will drive meaningful economic benefit to the local community and help catalyze long-term energy cost reductions by making enhanced geothermal more affordable and accessible.”

What Do Analysts Expect From Fervo Energy Stock?

While the share price of FRVO stock has been a disappointment and the company doesn’t expect Phase 1 of Cape Station to be operational until the end of the year, analysts see a lot to like. Fervo has a consensus “Strong Buy” rating overall based on 13 analysts. The mean price target of $42.82 represents potential upside of 115% from current levels.

For a long-term investor, Fervo Energy is an appealing option to develop relatively clean energy to supply the needs of data centers and utility companies without fossil fuels. That’s why Google is so interested, and why FRVO stock is a compelling investment option.