Plug Power vs. Occidental Petroleum: Which Energy Stock Is a Better Buy in 2026?

Written by Sara Appino for The Motley Fool->

Plug Power is a major provider of green hydrogen and fuel-cell solutions, though it faces high customer concentration with Walmart.

Occidental Petroleum generates billions in free cash flow while pivoting its business model toward oil production and low-carbon ventures.

Which energy-focused investment is the right fit for your portfolio in 2026?

Investors in 2026 face a clear choice between a speculative hydrogen pioneer and a profitable oil giant. Plug Power (NASDAQ:PLUG) and Occidental Petroleum (NYSE:OXY) represent two very different paths in the evolving energy landscape.

Plug Power focuses on the future of green hydrogen and fuel-cell technology, while Occidental Petroleum produces traditional energy while investing in carbon capture. They are compared because they offer different ways to play the energy transition.

Plug Power builds green hydrogen and fuel-cell solutions for global industrial applications. The company focuses on large-scale logistics, providing fuel to the material handling and e-mobility sectors. Walmart is a major customer, representing roughly 24.2% of consolidated revenues as of late 2025, adding a layer of risk to the business.

In FY 2025, revenue reached nearly $709.9 million, reflecting a growth rate of approximately 12.9% over the previous year. Despite this growth, the company reported a net loss of approximately $1.6 billion for the same period. This resulted in a net margin of -229.8%, highlighting the significant costs involved in scaling hydrogen production.

As of its December 2025 balance sheet, the debt-to-equity ratio was 1.0x. This metric, which measures a company's total debt against its shareholder equity, sits at 1.0x, while a current ratio of 2.3x indicates the company has enough short-term assets to cover immediate liabilities. However, free cash flow was negative $661.5 million in FY 2025, meaning cash outflows exceeded inflows from operations and capital investments.

Occidental Petroleum operates a massive upstream oil and gas business with significant production in the Permian Basin and Middle East. Following the sale of its chemical business to Berkshire Hathaway, the company has pivoted toward a focused energy model. It is also expanding into low-carbon ventures, positioning itself among renewable energy stocks through its carbon capture projects.

In FY 2025, the company generated revenue of nearly $21.6 billion, though this was a decline of roughly 20.3% compared to the prior year. Despite lower sales, the company achieved net income of approximately $2.4 billion. This performance resulted in a net margin of 11.0% for the fiscal year.

As of December 2025, the balance sheet showed a debt-to-equity ratio of 0.7x, suggesting a moderate level of debt relative to equity. The current ratio is 0.9x, indicating that short-term assets are slightly lower than short-term liabilities. Most importantly, the company generated $4.1 billion in free cash flow, providing significant capital for dividends or reinvestment.

Plug Power faces legal challenges, including multiple securities class action lawsuits regarding project timelines and funding. The company also struggles with liquidity constraints, remaining dependent on external financing despite recent asset sales. Execution risks remain high as the transition to new hydrogen production facilities is technically complex and prone to delays.

Occidental Petroleum is highly sensitive to commodity price volatility, as fluctuations in oil and gas prices directly impact its cash generation. The company also faces operational hazards and environmental liabilities, including remediation costs for legacy sites. Furthermore, its decarbonization strategy requires heavy capital investment in technologies that may face competition from giants like ExxonMobil.

Occidental Petroleum appears more attractive to value seekers with its low Forward P/E, while Plug Power carries a higher P/S ratio despite its lack of profitability.

Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

I'd go with Occidental Petroleum, and it's not a particularly close call. Plug Power is making incremental progress on its hydrogen infrastructure business, and the long-term case for green hydrogen in a decarbonizing world has its merits. But Plug has been burning through cash for years and has missed profitability targets repeatedly. It’s still working to convince investors that the business model can actually scale.

Occidental, meanwhile, is delivering the kind of results that really reward patient investors. The company just beat earnings estimates by a wide margin and its production surpassed guidance. I like that Berkshire Hathaway continues to hold a large stake in the company, which gives this company a long-term endorsement that carries weight. And the Permian Basin operations are among the most efficient in the industry.

Oil prices are always a variable with Occidental, and that uncertainty is worth acknowledging. But for a long-term investor choosing between a profitable, well-run energy company and one still trying to find its footing, Occidental is the more comfortable place to put your money.

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Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Walmart. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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