If its recent share price performance is anything to go by, investors no longer consider Ceres Power Holdings (LSE:CWR) to be a growth stock. At the start of the year, the shares of the FTSE 250 developer of clean energy technology were changing hands for 213p. Over the next five months, the group’s share price climbed 310% to an all-time high of 873p. Now (18 September), it’s back down to 387p.

And with 13.04% of the shares having been borrowed in anticipation of a further fall, it’s amazing how quickly things have turned. However, despite this gloomy backdrop, analysts have a 12-month price target of 925p.

What on earth’s going on? More importantly, who’s right?

Digging deeper

Although the group’s fuel cells for power generation and electrolysers for green hydrogen have many commercial applications, they’re well suited to data centres.

With existing grid connections struggling to keep pace with electricity demand, Ceres Power’s solutions can be quickly deployed anywhere in the world. They could also help overcome the unpopularity of data centres. Opinion polls regularly find around two-thirds of voters are opposed to them being built in their communities. Concerns over their energy and water requirements are the biggest reasons for the hostility.

However, the company remains in the red. And in May, it surprised investors with a £103m fundraise at 570p a share.

Presently, the group has arrangements with the following partners:

• Centrica (UK)
• Denso Corporation (Japan)
• Delta Electronics (Taiwan)
• Doosan Fuel Cells (South Korea)
• Shell (India)
• Thermax (India)
• Weichai Power (China)

These are all big companies making huge investments in clean energy. Crucially, Ceres Power licences its technology to them. In return, it receives a royalty based on usage. At the moment, these are tiny. In 2025, the first time it received this kind of income, its royalties were £110,000.

Historically, most of the group’s revenue has come from joint development work and the provision of technology hardware. But its capital-light business model should see the balance shift to royalty income over the coming years.

The next milestone for the group occurs on 23 September, when it unveils its 2026 half-year results. Analysts are forecasting positive EBITDA (earnings before interest, tax, depreciation, and amortisation) for the first time.

My view

In my view, investing in Ceres Power carries above-average risk. It’s loss-making and it’s still unclear whether its technology will be widely adopted. And with calls for the development of AI to be slowed, I can see why some investors have bailed out.

However, I remain optimistic. Fuel cells are highly efficient, produce minimal harmful emissions, have a compact footprint, and aren’t affected by the weather. Also, the quality of the group’s partners gives me confidence. They’re all slowly making progress in convincing the world that this technology could be the way forward.

Having said that, I don’t think the stock’s an unmissable bargain. It’s always hard to value a company that isn’t profitable. Losses have to be funded from somewhere so there’s always a risk that further cash will be needed.

But because of its long-term potential, I have it in my portfolio. And I reckon others could consider doing the same. However, I acknowledge there are plenty of other — less risky — shares on offer today that are also worth a closer look.

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James Beard owns shares in Ceres Power Holdings plc.