A sign at a Ford dealership in Fontana, California. (Kyle Grillot/Bloomberg)
key takeaways:
- Ford shares remained above pre-rally levels ahead of earnings after surging 44% in May on investor optimism about its AI-linked battery energy storage business.
- Analysts and investors view energy storage as a potential growth driver, but many said profitability and large-scale partnerships could take years to reach despite high profit projections.
- Ford’s earnings report is expected to focus on energy storage customer announcements and partnership updates as management looks to maintain investor enthusiasm.
Two months after Ford Motor Co. became the latest old-economy manufacturer to join the artificial intelligence rally, investors are looking for proof that their enthusiasm was justified.
Shares of the Michigan-based carmaker surged 44% in May as investors bet that its battery-storage business would benefit from rising demand for electricity for AI data centers. As the company prepares to report earnings after the bell, they’ll be looking for updates on partnerships that confirm these expectations. Ford shares were up 1.5% as of 2:30 p.m. in New York on July 28.
While enthusiasm has cooled since Ford’s best month since the financial crisis, the stock remains above its pre-rally level. This is despite analysts warning that energy storage is still years away from turning a profit.
“The market will really react to the backlog building up, giving investors visibility that this earning opportunity is somewhat secure,” said Morgan Stanley analyst Andrew Percoco. “The market won’t wait until you really start seeing the numbers in 2028.”
Skyrocketing valuations for megatechs and companies making semiconductors and other hardware have spurred investors to dive deeper into the AI revolution. Industrial and auto stocks have been particular beneficiaries. The market has piled on bulldozer-maker Caterpillar Inc. and vehicle suppliers BorgWarner Inc. and Aptiv Plc, before turning to Ford for their potential to aid autonomy construction.
During the company’s annual meeting in May, CEO Jim Farley called energy storage a “high-growth, high-margin, anti-cycle market development for Ford.” Ford’s 2026 adjusted profit forecast has risen nearly 11% over the past three months, according to data compiled by Bloomberg.
It’s smart for Ford to try and compete in energy storage, and power systems are one of the biggest backlogs in AI, said Brian Mulberry, portfolio manager and chief market strategist at Zacks Investment Management, which owns Ford stock.
“It will highlight and elevate their brand as they try to be more modern and more at this time,” Mulberry said. “I think it could be really helpful for them.”
Percoco, which covered clean technology before autos, promoted early progress. He wrote that Ford’s energy storage business and partnership with Chinese battery-leader Contemporary Amperex Technology Co. could be worth $10 billion and could lead to deals with hyperscalers.
He still sees it as a great opportunity. Margins for electric vehicle maker Tesla Inc.’s energy unit have historically been about twice the margins of the core car business, and Percoco expects the same to be true for Ford as it grows its business. Tesla has offered energy storage for years, and the segment was to comprise more than 13% of its revenue in 2025.
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He sees Ford’s energy storage business growing rapidly in 2027 and breaking ground in late 2028. In the meantime, management will need to provide incremental updates on the partnership to maintain investor enthusiasm, said Percoco, who has an equal-weight rating on the stock.
Signaling that optimism over the business prospects remains strong, Jefferies analyst Philippe Houchois this week upgraded Ford stock to buy from hold, citing energy storage.
Bank of America analyst Alexander Perry said in a July 15 note that investors would focus on potential energy customer announcements. BNP Paribas analyst James Picariello said it will take several years for Ford to scale up the energy storage partnership to meet its desired capacity, even beyond 2028.
So far, Ford Energy has struck a deal with EDF Power Solutions North America.
When General Motors Company announced its entry into the energy storage sector, it did not cause a stir in the market. GM’s investment in startup Peak Energy Technologies is relatively small, needs time to scale up, and lacks the name brand of Ford-partner CATL.
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Ford shares have risen 20% since the company’s last earnings report in April ended July 27. Over the same period, GM stock rose 14%, while Stellantis’s U.S.-listed shares sank 26%.
But barring its recent outperformance, Ford has lagged behind GM when it comes to its core business. GM shares have risen nearly 60% over the past five years, compared with Ford’s 6.5% advance.
GM’s second-quarter results beat analysts’ estimates and the company raised its full-year profit outlook, sending the stock nearly 9% higher last week.
Ford may need to take more gambles to boost its brand and boost its stock price, while its neighbors and competitors can rely on their core businesses, according to Picariello, who has a hold-equivalent rating on Ford and a buy-equivalent rating on GM.
Picariello said, “The numbers don’t lie. They’re not performing as well as GM. There’s no doubt Ford has more holes to fill.”
