Will Hydrogen Stocks Continue To Outperform?
Our theme of Hydrogen Economy Stocks, which includes the stocks of U.S. listed companies that sell hydrogen fuel cells, related renewable energy equipment, and supply hydrogen gas, has risen by 5% year-to-date in 2023, outperforming the S&P 500 which remains down by -2% over the same period.
Hydrogen and renewable stocks have fared well over the last year driven by a mix of favorable regulations, including the passage of the Inflation Reduction Act in the U.S., and an increasing urgency to reduce the dependency on fossil fuels given the increase in oil prices following Russia’s invasion of Ukraine. Moreover, earnings from many players in the space have been relatively strong in recent quarters. For example, Bloom Energy
So, what’s the outlook like for the theme? Although hydrogen is unlikely to be as big as other renewable energy sources such as solar and wind, it could be crucial in decarbonizing the industrial sector and heavy vehicles. It could also be seen as a medium of storage of renewable electricity. While mostly external factors drove the movement of the theme in 2022, investors will need to watch for underlying improvements in hydrogen technology, which still remains somewhat relatively expensive and small-scale. First Solar
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