A new geothermal energy company in Utah just reached a major milestone. Fervo Energy (FRVO) used oil-industry drilling methods to extract clean power from hot rocks deep underground, and analysts are now paying attention to the company’s potential.

Even with its potential, the stock has had a rough year. Fervo Energy went public in May 2026, and shares climbed quickly to around $37. Since then, the price has dropped almost every month. By September 25, the stock closed at $15.18. The consistent losses over the past months have made most large investors of the stock become passive.

Now Wolfe Research thinks the drop is about to end. On September 25, analyst Steve Fleishman upgraded the stock from Peer Perform to Outperform, with a 12-month price target of $29. At today’s price of about $14, the stock could nearly double in the next year if the call is right.

The upgrade came right after Fervo announced that its flagship project in Utah just sent its first round of electricity to the power grid.

What triggered Wolfe Research’s bullish call on Fervo Energy

Steve Fleishman has covered utility and power stocks for more than 20 years, first at Merrill Lynch and now at Wolfe Research. He is one of the most followed analysts in the sector. His usual picks are large, steady utilities, so a buy call on a young company with no profits yet is a bigger deal than it might sound.

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Fleishman called the Cape Station announcement “an important milestone” and said the news “increases confidence in Fervo’s ability to meet its long-term development targets,” StreetInsider reported. Wolfe also said, “The current price presents an attractive entry point for a leading player in an exciting new power vertical.”

His $29 target is actually one of the lower ones on Wall Street.

The average estimate from all analysts covering the stock is around $40.87. Bernstein and JPMorgan both have targets as high as $47.

Fleishman is being more careful with his calculations. He is pricing in what Fervo has already built and giving less credit to projects that are still years away.

Fervo Energy’s Cape Station in Beaver County, Utah, brought its first 33 megawatts online in September 2026, marking a major step for enhanced geothermal power.

SOPA Images / Getty Images

What the Cape Station milestone means for Fervo’s business

Fervo makes money by building and running geothermal power plants. It drills deep wells to reach hot rock miles underground, then uses that heat to generate steam that spins turbines. The turbines produce electricity, which Fervo sells to power companies and large customers.

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What makes Fervo different is how it drills.

The company borrows tools from the shale oil industry, using horizontal wells and hydraulic fracturing to reach much more hot rock than older geothermal projects could.

This method is called an enhanced geothermal system. Until recently, it was mostly tested in labs. Cape Station is the first real-world project to show it can produce power at a large scale.

Fervo CEO Tim Laimer called the event “a landmark moment for the future of enhanced geothermal systems,” saying the achievement proves the technology can meet the huge power needs of a modern economy, according to Business Insider.

Cape Station brought its first 33 megawatts online in September. Fervo believes the full site can produce around 4 gigawatts of geothermal power over time, with a target of 400 megawatts once the current build is complete.

How AI data center demand strengthens the bullish case

AI data centers use large amounts of electricity, and they need an uninterrupted supply. Solar panels stop working at night. Wind turbines slow down when the air is still. However, geothermal power runs all the time, because the heat inside the earth is always there.

That is why the biggest tech companies are signing long-term power deals with geothermal developers. Fervo already has a 396-megawatt power supply deal with Google for a data center project. Now that Cape Station is producing power, Fervo will have a much easier time signing more of these deals at good prices.

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Research from Goldman Sachs shows US data center power demand could grow more than 160% by 2030, driven almost entirely by AI. Wolfe’s note said this trend is a major reason Fervo can charge higher prices on future contracts.

The risks investors should track before buying in

Fervo is spending a lot of cash to build Cape Station and other projects, and revenue is still very small. The company’s last quarterly report showed only $0.11 million in revenue, according to an SEC filing. That reflects a business that is still mostly in construction mode.

Not every analyst agrees with Wolfe’s positive view though.

Bank of America analyst Ross Fowler lowered his price target on FRVO to $30 from $36 on September 24. He kept a Buy rating but pointed to a timing shift at Cape Station and lower valuation multiples across similar companies as reasons for caution.

There is also an ongoing legal review of Fervo’s past disclosures. These kinds of reviews can drag on for months, and bad news from that side could push the stock lower before the good news from Cape Station starts to matter.

If you are considering buying FRVO, it is safer to treat it as a small bet rather than a large holding. The stock could climb toward $29 if Fervo executes well, but expect big swings along the way.

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