What on earth is going on with Ceres Power shares?
Amazing things are happening with Ceres Power (LSE: CWR) shares. The share price in the green energy stock is up 531% since April last year. Analysts’ forecasts are getting upgraded, and the company has re-entered the FTSE 250.
Keen observers will note we’re still some distance from all-time highs. The current 303p share price looks tiny compared to previous highs of 1,576p in 2021 and 2,612p all the way back in 2007. What’s going on here? And could Ceres Power shares be one of the London Stock Exchange‘s best bargains?
Let’s have a quick refresher on what the company does. Ceres designs solid oxide fuel cells â a form of clean and green energy. They can run on both gas and hydrogen, making them suitable for energy needs today and in the future.
Why have the shares been surging? It’s because of â surprise, surprise â artificial intelligence. The need for vast amounts of energy for AI data centres has pushed up renewable energy stocks left, right, and centre. The shares in another British green energy firm â ITM Power â flew higher in 2025 too.
Perhaps the key detail is the delays for other sources of energy. Wait times for grid connections and delivery of gas turbines are said to be pushing five years or longer. That’s too long to wait for the main players caught up in the AI revolution.
In short, this is an indirect AI play. The expectation is that the brave new world that artificial intelligence might usher in will be powered (at least in part) by forward-thinking energy firms.
All this has resulted in some of the most bullish analyst forecasts you’ll find this side of the Atlantic. Goldman Sachs put a price target of 530p on Ceres Power. If that target is on the money then investors could expect a £10,000 investment to turn into £17,492 in the next 12 months.
Crazy swings
As bright as all that might sound, this is still a pre-earnings company. There is a lot of risk buying stock in a company that hasn’t proven itself capable of turning a profit yet.
One way we can get an idea of valuation with these companies is to look at revenue. Ceres Power achieved sales of £32m inthe financial year 2024. Comparing that to its market cap of £600m gives up a price-to-sales ratio of around 20. That’s eye-wateringly high.
These types of stocks are more likely to have crazy swings in value. It’s true enough for Ceres. Despite rocketing up over five times in value in the last year, the share price is still down 88% from its all-time high. That high was reached in 2007 too, showing the unfortunate reality of anyone who was excited about this tech a couple of decades ago. We’re now 18 years on and investors who picked the wrong time have lost a lot of money.
Ceres Power gets its name from Ceres, the Roman goddess of agriculture. Is that name a portentous sign of future growth in the share price? Could investors be looking at a bountiful harvest once this new technology hits the mainstream? Only time will tell for sure. But I think the stock is worth considering for those aware of the risks.
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John Fieldsend has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
