06.01.25 - Hydrogen sector - strong gains

The US Department of the Treasury released today final rules for clean hydrogen production tax credit, established by the inflation reduction act. The final rules should move projects forward and help grow the industry. Companies such as Plug Power, among others, stand to benefit.

Markets: Based on the news, the hydrogen sector is among today’s top-performing industries. The sector ETF has surged almost 6%, marking a notable recovery from recent lows.

My View: Since the hype in 2021 and 2022, the sector related stocks did rather poor. Companies suffered from rising interest rates and growth fell rather short of expectations. While the sector has benefited from support under Biden’s administration, the outlook with Trump as the new president could be rather weak. However, this is already priced in since the Election Day back in November.
If the sector regains attention and builds on some positive momentum, even modest inflows could help lift these stocks from their current lows. However, volatility is likely to remain elevated, along with associated risks. I remain invested, as I believe hydrogen technology holds significant long-term potential.

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