Ford stock jumps 21% in two days as AI rally spreads beyond tech stocks

Ford Motor Co. shares jumped after the automaker expanded into energy storage, a move investors linked to growing demand from artificial intelligence infrastructure projects.

The stock climbed about 21% in two days, marking its biggest rally in six years. Shares rose 6.7% on Thursday and closed at their highest level since July 2024. The gain also pushed the stock into positive territory for the year.

Investors have increasingly backed companies tied to AI infrastructure, including data centres and power systems. That trend has also lifted industrial companies beyond the technology sector.

AI Boom Effect

Caterpillar Inc. shares have surged more than 160% over the past year after its power generation business became linked to AI-related demand. Vertiv Holdings Co. has rallied 240% during the same period, supported by strong sales to data centres.

“It’s emblematic of an overheated thematic rally,” said Steve Sosnick. “Might it be a good thing for Ford to sell batteries to AI centers? Absolutely.”

He added that the stock rally “seems more like a bout of momentum-driven speculation than a sober revaluation of its prospects.”

Ford’s traditional rivals did not see similar gains. General Motors Co. stock rose about 1.7% over the last two sessions, while US-listed shares of Stellantis NV gained 5.9%.

$2 Billion Bet

Ford is investing $2 billion in its energy storage business. The company plans to convert a Kentucky factory that currently makes electric-vehicle batteries into a facility producing large battery cells for energy storage.

According to BloombergNEF, US demand for grid batteries is expected to more than double by 2030 to over 100 gigawatt-hours.

Ford Chief Executive Officer Jim Farley said the company is already seeing strong customer interest ahead of production, which is scheduled to begin late next year.

“We have seen tremendous interest from customers and we’re actually in the contracting phase for our early capacity as we speak with several customers,” Farley said during Ford’s virtual annual meeting.

“Battery energy storage systems have the potential to be a high growth, high margin, anti-cyclical market development for Ford,” he added. “We see a path to diversify our revenues at the company and de-risk the core automotive business.”

Analysts Sound Caution

The comments came after Andrew Percoco estimated earlier this week that Ford Energy could be worth $10 billion. He also said the automaker could soon strike a deal with hyperscalers.

Dan Levy called the energy storage opportunity “compelling” and estimated potential annual earnings of $300 million to $500 million before interest and taxes. However, he warned that Ford still needs to execute on its plans and noted that Tesla Inc. remains the dominant player in the market.

Ivan Feinseth said the excitement around the stock may fade because Ford’s main business continues to depend on vehicle sales.

Analysts also warned that companies benefiting from the AI trade could face risks if spending on AI infrastructure slows, especially when their core businesses remain tied to economic conditions and consumer demand.

“When the market starts grasping for peripheral connections to tie assets to an overwhelming theme, you’re late in the investment cycle,” said Michael O’Rourke.

“The winners have rallied so much that profit-taking investors look for companies with weaker catalysts as rotation targets to maintain exposure to the trend.”

Matt Maley warned that Ford’s stock could face a sharp pullback after the rapid rally.

“Investors will want to be more careful about chasing it,” Maley said. “These meme-styled rallies usually see meme-styled pullbacks before long.”