Ormat lifts guidance, wins DOE funds, and pivots geothermal toward AI data centers
Raised 2026 guidance on strong Q2 Ormat beat on the second quarter, with revenue up 10.6% to $258.8 million, and lifted full-year 2026 revenue and EBITDA guidance. Energy storage revenue nearly tripled on strong PJM power pricing. Higher expected profit and a steady dividend make the stock more attractive.
Guidance raise is the clearest fundamental driver of the period.
DOE backs geothermal with up to $35 million The U.S. Department of Energy selected Ormat for up to $35 million for two geothermal research projects. Government money lowers the company's own development costs and signals policy support, which helps new projects get built and de-risks future growth.
New government funding directly lowers capital costs and supports the growth story.
Pivot to enhanced geothermal for AI data centers Ormat launched two enhanced geothermal pilots in Nevada with Sage Geosystems and SLB, working with Google and Switch. Management says each hyperscaler project could reach 500 megawatts. If it works, this opens a large new market beyond Ormat's traditional geothermal plants.
This is the biggest potential new demand source and explains the long-term bull case.
Analyst praise, but valuation stays rich Oppenheimer named Ormat a top power technology pick, and analysts see fair value near $127 versus a recent close around $93. But the stock trades near 45 times earnings, far above renewable peers, and relies on Chinese batteries with heavy planned spending. Cheap-looking on cash flow, expensive on profit.
Captures the real counterweight: bullish analyst demand versus stretched valuation and cost risks.