Ford Shares Surge 25% in Two Days Amid AI Adoption Across Traditional Industries

Ford's Stock Surges Amid Hype Over Energy Storage and Artificial Intelligence

Ford Motor Co., a 122-year-old automaker, has seen its stock surge as the company pivots toward energy storage. The shares climbed as much as 10% on Thursday in New York, pushing the two-day gain to 25%, the most intraday since March 2020. The shares briefly traded at the highest level since July 2023, having turned positive for the year.

Investors have been eager to embrace companies that stand to benefit from power-hungry data centers and other infrastructure to support artificial intelligence. This has led to a surge in stocks such as Caterpillar Inc., which has risen 160% over the past 12 months, and Vertiv Holdings Co., which has seen a 240% rally over the same period. The companies' sales to data centers have fueled these gains.

However, analysts are cautioning that the hype surrounding Ford's energy storage business may be short-lived. The company is investing $2 billion to get into 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. US demand for grid batteries is expected to double by 2030 to more than 100 gigawatt-hours, according to Bloomberg NEF.

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Ford's closest traditional peers, General Motors Co. and Stellantis NV, have not seen the same level of growth, with General Motors Co. stock rising about 2.4% over the past two sessions, and Stellantis NV's US-listed shares adding 5.4%.

Ford is already seeing strong demand for its energy storage batteries, with Chief Executive Officer Jim Farley stating that the company is in the contracting phase for its early capacity with several customers. The company's energy storage opportunity is seen as "compelling," with potential annual earnings of $300 million to $500 million before interest and taxes, according to analyst Dan Levy.

However, analysts are warning that the hype may be making non-tech companies susceptible to AI risks, including a slowdown in spending. Ivan Feinseth, chief investment officer at Tigress Financial Partners, said that Ford's fundamental drive is still car sales. Matt Maley, chief market strategist at Miller Tabak + Co., warned that investors will want to be more careful about chasing Ford's stock, as meme-styled rallies usually see meme-styled pullbacks before long.

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