Ford Shares Experience Largest Single-Day Gain Since 2020.

Ford Stock Soars 15% on Morgan Stanley's Bullish Energy Storage Call

Ford Motor Co. stock experienced a significant surge on Wednesday, climbing as much as 15% by 2:25 p.m. in New York. This sharp increase puts the stock on track for the biggest one-day gain since March 2020, and marks a turning point for the year, with the company's shares now in the positive.

According to Morgan Stanley analyst Andrew Percoco, there is a high likelihood that Ford signs an Energy Storage System supply agreement with large commercial customers, including hyperscalers, over the next few months. This potential deal is attributed to an underappreciated strategic competitive advantage for Ford's energy storage business, which was established through a deal with Chinese battery technology behemoth Contemporary Amperex Technology Co. Ltd. (CATL).

Percoco has estimated that Ford Energy could be worth $10 billion, with the possibility of its valuation approaching that of Tesla's energy business as the company executes its capacity expansion plans and starts to build a firm order backlog. To achieve this goal, Ford is investing $1.5 billion this year to enter the energy storage business. The company is converting a Kentucky factory for batteries into a facility that builds large storage cells for data centers and utilities, while also devoting part of a Michigan battery plant, opening this year, to producing smaller storage cells for the consumer market.

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Ford's shift to energy storage systems is seen as a key element to the company's target of achieving an 8% earnings margin before interest and taxes by 2029, up from 3.6% last year. Chief Executive Officer Jim Farley stated that the company's new energy storage business is being positively received by utilities and other customers, with deep relationships and financial advantages contributing to the interest.

The potential for Ford to count massive technology firms as customers has also boosted trader sentiment, with the company's energy segment seen as a pivot to a higher margin business. According to Bloomberg Intelligence analyst Steve Man, this expansion has the potential to significantly impact Ford's business.

The attention surrounding hyperscalers has also had a significant effect on investor sentiment, with traders taking note of the growing interest in companies related to this sector. As Chief Market Strategist at Miller Tabak + Co, Matt Maley noted, "It does show how much anything having to do with hyperscalers right now is getting a lot of attention from investors."

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