Solaris Energy Infrastructure, Inc. (SEI): A Bear Case Theory

We came across a bearish thesis on Solaris Energy Infrastructure, Inc. on Valueinvestorsclub.com by bluewater12. In this article, we will summarize the bulls’ thesis on SEI. Solaris Energy Infrastructure, Inc.’s share was trading at $26.98 as of September 3^rd. SEI’s trailing P/E was 45.73 according to Yahoo Finance.

Solaris Energy Inc. (SEI) has seen its stock surge nearly 4x in the past year after pivoting from oilfield services into AI-linked infrastructure through the $200 million acquisition of Mobile Energy Rentals in 2024. However, the business is now showing signs of unraveling. SEI’s power rental segment is fundamentally a commoditized business with no proprietary technology, relying almost entirely on a single customer—Elon Musk’s xAI.

The Colossus data center in Memphis has been SEI’s only major site, but xAI has already removed a majority of SEI’s turbines as new substations and Tesla battery storage came online, and plans to idle the rest later this year. Despite SEI’s bullish claims of capacity expansion, xAI has publicly said there will be no mobile generators at its planned second site. Industry experts also suggest SEI’s equipment has been stressed by power oscillations during AI model training, further limiting sustainability.

The risks are compounded by SEI’s questionable management history, inconsistent disclosures versus xAI, and reliance on contracts whose termination clauses and idle asset treatment remain opaque. Meanwhile, competitors from Fortress to Atlas Energy are piling into mobile power rentals, signaling frothy conditions in an already crowded space. SEI trades at ~40x forward earnings and ~6x tangible book value, pricing in aggressive consensus expectations for $3+ EPS by 2027.

Yet, if idling continues and no new customers emerge, EBITDA could fall to $200 million by 2026 versus the $363 million consensus, driving EPS to ~$0.50. At normalized multiples, shares could retrace to $5–10, implying over 80% downside. With no free cash flow expected until 2026 and rising leverage from the MER acquisition, SEI faces significant boom-bust risk. This is a matter of “when, not if,” with looming catalysts from xAI’s shifting power strategy and likely earnings misses.

Previously we covered a bullish thesis on Solaris Energy Infrastructure, Inc. (SEI) by LiterallyAzzmilk in March 2025, which highlighted the company’s growth through the Mobile Energy Rentals acquisition and its positioning in high-demand energy markets. The stock appreciated modestly as initial optimism played out. Bluewater12 shares a contrarian view, emphasizing risks from customer concentration, temporary turbine deployments, and potential earnings downside, challenging the sustainability of SEI’s growth thesis.

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Disclosure: None.