From Spark to Surge: This Small Clean Energy Company Just Leaped 139%

30‑Second Take

Why now? STEM's first quarter results showed a company making meaningful progress, with a strategic workforce optimization program driving $30 million in annual cost savings, a high-margin product, and strong GAAP and non-GAAP gross margins.

The firm also grew its annual recurring revenue by 8% and increased total revenue by 27% year-on-year. 

As an investor, these are the kinds of top-line results you love to see.

The workforce savings aren’t just money in the bank; they’re a step towards creating a leaner company on a path to long-term profitability.

High margins are indicative of operational effectiveness, while the uplift in annual recurring revenue sets the stage for a stable income stream, a desirable trait in energy and tech sectors that STEM intersects.

Trade Setup

Time frame: Swing to medium-term
Edge type: Momentum breakout

Snapshot Table

Chart

1-Month Synopsis: STEM stock has gained 139.50% over the last month, so it would be something of an understatement to say the month has been action-packed.

Almost one month ago, on June 30, STEM was trading around $6.20 as it continued to rebound from its April low of $0.29.

Through July’s sessions, the stock climbed at a steady pace as investor confidence began to build. The real breakout began mid-month, with a change of pace kicking in and volumes soaring around July 17.

That momentum resulted in gains of 45.6% in just one trading session and took prices as high as $19.48 as the month wound down. 

In addition to the positive progress STEM is making within its own business, this technical rally (the RSI peaked around 84) was fuelled by broader market sentiment in the renewables and energy storage sector.

While a small player, STEM is making a strong play for profitability, which makes it a high-conviction, high-volatile play.

Bull Case 

Core thesis: STEM creates AI-enabled software and services for clean energy assets. It is the first-ever pure play smart energy storage company to go public in the USA and currently has a portfolio of more than 16,000 customers worldwide.

It helps its clients to maximize the value of their clean energy products with software and lifecycle services delivered by a team of STEM experts. 

Catalysts: STEM’s strong Q1 2025 financial results and a strategic shift toward high-margin, software-led recurring revenue are pivotal to its investor appeal.

Having pivoted from hardware to AI-driven energy storage and grid optimization software, STEM is in a position to solidify higher margins and generate recurring revenue in the long term. 

Valuation upside: Analyst price targets range from a low of $7.00 to a high of $20.00. The average is $12.60.  

Technical tailwind: STEM is trading above 50, 100, and 200-day exponential moving averages, with an increase in trading volumes.

It’s due to publish its Q2 earnings release on August 07, which could provide a further boost to stock prices.

Bear Case 

Key risk: TEM is closely tied to utility-scale solar and battery projects, which are vulnerable to supply chain delays, regulatory uncertainty, and permitting issues.

Each of these roadblocks has the potential to impact revenue generation and strain cash flows.

Macro/sector headwinds: STEM's business model benefits from clean energy incentives, such as the U.S. Inflation Reduction Act (IRA).

A change in political administration priorities or weakening of support for clean energy could undermine demand for energy storage and optimization services.

Competitive threat: The energy storage and software space is highly competitive, with both startups and major players (like Tesla, Fluence, and Enphase) developing more innovative, cheaper solutions.

STEM will need to find ways to differentiate its AI offering and flagship PowerTrack^TM Power Plant Controller (PPC) system to remain competitive and continue to scale. 

Crowded-trade concern: STEM has benefited from investor enthusiasm for AI-driven platforms, renewable energy, and smart grid technology.

These trends have attracted a wave of thematic or ESG-focused investors, often driving valuation ahead of fundamentals.

If sentiment turns — for instance, due to AI fatigue or clean energy underperformance — investors may rush to exit, creating downward pressure on the stock.

Quick Checklist 

✅ Thesis still valid after today’s close
✅ Volume confirms move above key levels
✅ Catalyst date double-checked (July 30, 2025)

Deep‑Dive Links

• Q1 2025 Earnings Report 

• Analyst Ratings and Price Targets

• Short Interest Data

• Company Profile and Investor Relations

That’s all for today’s Everyday Alpha. We’ll have a new pick for you every morning before the market opens, so stay tuned!

Best Regards,
—Noah Zelvis
Everyday Alpha