What are the best hydrogen stocks for UK traders to watch?

What are hydrogen stocks?

Hydrogen stocks are shares in companies involved in the production, storage, distribution or use of hydrogen as an energy carrier. Green hydrogen, produced by splitting water using electrolysers powered by renewable electricity, is the most environmentally significant category and the primary focus of most listed pure-play hydrogen companies. 

The sector also includes blue hydrogen (from natural gas with carbon capture) and companies that make fuel cells, which convert hydrogen into electricity. Access to UK-listed hydrogen stocks is available through our share dealing account and stocks and shares ISA.

The investment case for hydrogen rests on the expectation that electrolysis costs will continue falling as manufacturing scales up, making green hydrogen cost-competitive with fossil fuels. Government support in the UK, EU and US has accelerated project development, but most listed companies remain dependent on continued public funding and long-term offtake agreements to reach profitability.

UK hydrogen stocks to watch

ITM Power (AIM: ITM)

ITM Power is one of the UK's largest dedicated green hydrogen companies, producing proton exchange membrane (PEM) electrolysers for green hydrogen generation. Its FY2025 revenues increased by approximately 58% to £26 million, per IG's July 2026 update, reflecting growing demand for its electrolysis systems. Management guidance for FY2026 pointed to revenue growth of a further 50% to £35-40 million, with EBITDA loss expected to narrow. The company is focused on building contracted order backlogs and improving margins as production scales. ITM remains pre-profitability, making cash runway and future capital raise plans important due diligence considerations.

Ceres Power (AIM: CWR)

Ceres Power develops solid oxide fuel cell and electrolyser technology, licensing its platform to partners including South Korea's Doosan and China's Weichai. CEO Phil Caldwell described 2025 as a key phase in the company's transition from R&D-led to commercially focused, highlighting mass production milestones. Ceres has pivoted to address emerging demand from AI data centres, which require reliable, low-carbon power. Shares trade at approximately 300p (as of July 2026, per IG), with analyst consensus price targets around 375p over 12 months.

AFC Energy (AIM: AFC)

AFC Energy provides alkaline fuel cell systems that use hydrogen to generate clean electricity. Its generators can also break down ammonia into hydrogen and nitrogen, providing flexibility across hydrogen supply chains. AFC is at a similar stage of commercial development to ITM and Ceres: it has technology partnerships and demonstration projects but remains dependent on securing large-scale commercial contracts to move toward profitability.

Global hydrogen stocks to watch

Hydrogen ETFs

For investors who want diversified hydrogen exposure without picking individual stocks, several ETFs provide sector coverage. The L&G Hydrogen Economy UCITS ETF (HTWO) and the VanEck Hydrogen Economy ETF (HDRO) are among the most widely referenced hydrogen-focused ETFs. Both hold a mix of pure-play hydrogen companies and larger industrials with hydrogen divisions. These are high-risk, concentrated thematic ETFs and should be treated as a satellite rather than a core portfolio allocation.

Risks of investing in hydrogen stocks

• Pre-profitability: most listed hydrogen companies operate at a loss and depend on periodic capital raises and government grants to fund operations.
• Policy dependency: the hydrogen sector's growth is closely tied to government subsidies, hydrogen mandates and carbon pricing. Policy reversals or delays directly affect project viability.
• Electrolyser cost reduction risk: the investment case depends on electrolyser costs falling materially. Competition from Chinese manufacturers, who produce at significantly lower cost, creates pricing pressure.
• Competition from other clean technologies: battery storage, direct electrification and green ammonia are all competing decarbonisation pathways. Hydrogen may not win in every application it currently targets.

Hydrogen stocks FAQs