Ford Motor Co. became the latest old-economy manufacturing company to be swept up in the hype surrounding artificial intelligence, as the 122-year-old automaker's pivot toward energy storage sent its stock surging. The shares extended their biggest advance in six years, climbing about 21 percent in two days. They gained 6.7 percent on Thursday, closing at the highest level since July 2024, turning positive for the year.
AI Hype Spreads to Traditional Industries
Investors have been eager to embrace companies that stand to benefit from power-hungry data centres and other infrastructure to support AI, turning their stocks into tech-like growth plays. Bulldozer maker Caterpillar Inc. is among storied industrial names to benefit from the boom, having surged more than 160 percent over the past 12 months, since its power generation equipment business was tied to the AI build-out. Sales to data centres have fuelled a 240 percent rally in Vertiv Holdings Co. over the same period.
“It’s emblematic of an overheated thematic rally,” said Steve Sosnick, chief strategist at Interactive Brokers. “Might it be a good thing for Ford to sell batteries to AI centres? Absolutely.” Yet, the stock’s rally “seems more like a bout of momentum-driven speculation than a sober revaluation of its prospects,” he added.
Ford’s Energy Storage Pivot
Ford is investing US$2 billion to enter the energy storage business, which includes converting a factory in Kentucky from making batteries for electric vehicles to producing large energy cells for the storage business. U.S. demand for grid batteries is expected to double by 2030 to more than 100 gigawatt-hours, according to Bloomberg NEF.
Chief executive Jim Farley said Thursday that the automaker is already seeing strong demand for its energy storage batteries that will go into production 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 told shareholders at the company’s virtual annual meeting.
“Battery energy storage systems have the potential to be a high growth, high margin, anti-cyclical market development for Ford,” Farley said. “We see a path to diversify our revenues at the company and de-risk the core automotive business.”
Analyst Views and Comparisons
The comments came after Morgan Stanley analyst Andrew Percoco estimated earlier this week that Ford Energy could be worth US$10 billion and said in a note that the carmaker could soon make a deal with hyperscalers. The energy storage opportunity for Ford is “compelling,” with potential annual earnings of US$300 million to US$500 million before interest and taxes, Dan Levy, an analyst with Barclays, wrote in a note to investors Thursday. But he cautioned that the automaker must still deliver on that promise, adding that Tesla Inc. remains the dominant player in this space.
Ford’s closest traditional peers haven’t seen the same rush. General Motors Co. stock has risen about 1.7 percent over the past two sessions, while Stellantis NV’s United States-listed shares have added 5.9 percent.
The speed of the rally has analysts cautioning that the hype is making non-tech companies susceptible to AI risks. While the potential for Ford is significant, the market’s enthusiasm may be outpacing the company’s actual progress in the energy storage sector.
