Plug Power (PLUG 0.90%) stock has had a rough 2025, with shares slipping in value by around 30%. And yet, the primary end market for this producer of hydrogen energy is expected to grow by leaps and bounds for decades to come.
Is this your chance to buy a high-growth stock at a deep discount? The answer might surprise you. This is one of the most debated stocks I've come across, but the investment opportunity is clear.
NASDAQ: PLUG
Key Data Points
Hydrogen should be a huge industry
If you're not familiar with hydrogen stocks, buckle up. These businesses operate in one of the most exciting sectors this century, but there's a lot of misinformation out there regarding how big this market might be, when growth should take off, and which companies will ultimately benefit.
A little over a year ago, global consultancy McKinsey & Co. released a detailed report outlining its long-term forecast for hydrogen demand. This demand forecast was largely fueled by decarbonization efforts. Many sectors of the economy like cement and steelmaking are considered difficult to decarbonize. That is, to meet climate commitments, industries like these must transition to renewable power.
But due to technological limitations often dealing with heat and energy density, these sectors of the economy will likely need to transition to something other than renewable electricity from wind turbines or solar farms. This is where hydrogen fuel comes into play. According to many observers, it's the most viable solution available to decarbonizing sectors like cement, steel, aviation, shipping, mining, data centers, and more.
McKinsey's forecast was summarized at the top of the report: "Despite some uncertainties across scenarios, global clean hydrogen demand is projected to grow significantly to 2050, but infrastructure scale-up and technology advancements are needed to meet projected demand."
Time to buy Plug Power stock at a discount?
Plug is a manufacturer of hydrogen fuel cell systems, so reports of significant long-term demand growth are encouraging to investors. But pay careful attention to McKinsey's caveats. Specifically, McKinsey's report highlights the need for infrastructure scale-ups and technology advancements before growth truly hits an inflection point.
Right now, very few areas of the global economy are prepared to use hydrogen fuel. As is the case with electric vehicles, the transition to hydrogen will take billions of dollars in investment plus decades of time. The transition will be slow and uneven across any given period. Plus, hydrogen fuel still isn't cost competitive with the current status quo. Many experts aren't sure that hydrogen will become cost competitive even by the end of this decade.
These uncertainties have consistently forced long-term forecasts like McKinsey's to be lowered over time. In September, for instance, McKinsey "slashed its projections for how much hydrogen will be used by the global economy by 2050 by 10% to 25%," according to industry news site Hydrogen Insight. These reductions occurred less than one year after their initial forecast.
Plug Power, meanwhile, continues to be a money-losing business. While it has since been resolved, the company in 2023 experienced going concern issues. While hydrogen demand is encouraging long-term, its growth inflection point likely won't arrive anytime soon. That's bad news for Plug Power. By all measures, the company doesn't have enough capital to survive for another few years, never mind another decade without a massive influx of new capital.
Hydrogen is a fascinating industry to watch. But as Plug Power's long-term price chart reveals, it hasn't been as fun of an industry to invest in. Despite the recent dip, leave this stock for others.
