A runaway rally in shares of Ford Motor Co. has evaporated due to the growing economic pressure on US automakers and fading hopes that the company will reap a windfall from the AI boom.
Shares of the Michigan-based carmaker fell as much as 2.8% on Wednesday before paring the losses. The intraday drop pushed the stock below $11.99 for the first time since May, erasing the last remnant of the 45% jump it saw earlier this year, when investors piled in on anticipation that its battery-storage business would strike profitable deals with artificial-intelligence companies.
“I do not believe that the AI halo will return until Ford actually starts producing returns from the battery storage unit, which is a 2027, 2028 story,” said Joe Gilbert, portfolio manager at Integrity Asset Management. Gilbert, who didn't buy shares during the May run, said the wipeout makes him more confident in his skeptical call.
Elevated fuel prices, a shaky US consumer, surging interest rates and intensifying competition from international manufacturers have weighed on the auto sector in 2026. Shares of Ford and its Detroit peer General Motors Co. have both underperformed the wider market, declining 8.1% and 5.3%, respectively, year-to-date, compared with a 12% advance for the S&P 500 through Wednesday's close.
Ford Chief Executive Officer Jim Farley also said Wednesday that a supplier issue temporarily impacted F-150 pickup production during the third quarter. The company is expected to report quarterly sales data later this week.
Ford joined other old-economy manufacturing companies being swept up in the AI hype after Morgan Stanley analyst Andrew Percoco said its energy-storage business could secure deals with hyperscalers. Investors piled into the stock, driving it to its biggest monthly jump in 17 years over the course of May.
Industrial and auto stocks have benefitted from investors' pursuit of other companies that will gain from the AI revolution after valuations on tech giants and chipmakers soared to heady levels. Similar expectations have buoyed shares of bulldozer-maker Caterpillar Inc., which have surged 70% over the past 12 months thanks to the company's power-generation equipment business.
Still, for Ford to maintain its autonomy-linked allure, investors and analysts say the company needs to demonstrate that it's building a backlog of energy storage customers — and to do so in a business that's years away from turning a profit. In its last earnings report, Ford notched a beat-and-raise second-quarter, but management offered no concrete updates on the energy storage business or its clients. Though they rose on the day of the results, shares sold off over the next six sessions, erasing 10% of value.
“We already knew in May that this business unit would not monetize until 2028, so that should have been baked in to the price at the time,” said Brian Mulberry, chief market strategist at Zacks Investment Management, which owns shares of Ford. Mulberry said the recent pullback is a buying opportunity and attributed the bulk of the weakness to overall market sentiment.
Meanwhile AI regulation and data-center construction have become political battlegrounds, potentially hindering the industry's rapid growth. And Ford has come under fire by the Trump administration due to the energy storage business's reliance on technology licensed from China's Contemporary Amperex Technology Co. Transportation Secretary Sean Duffy also rebuked a joint venture between Ford and Chinese carmaker Geely in Spain.
Ford pushed back against Duffy's criticism, arguing that it produces more vehicles and employs more hourly manufacturing workers in the US than any other automaker.
Morgan Stanley's Percoco, whose research catalyzed the run up, said the potential regulatory overhang is a relatively small factor in the stock's drop. Instead, recent weakness “has been driven primarily by concerns around the outlook, particularly the potential impact of higher interest rates and gas prices on the consumer, as well as continued commodity and logistics cost inflation and the resulting pressure on margins.”
The analyst said he still would expect the stock to react positively to future customer announcements or backlog growth on the energy storage side.
And as the stock has slid, technical indicators look dour, according to John Kolovos, Chief Technical Strategist at Macro Risk Advisors. If shares sustain a break below the $11.99 level, they'll have to find a lower equilibrium to settle at, he said.
“It's a terrible chart, both near and longer term,” Kolovos said. “If it can somehow reclaim $13.50 soon, then the short term improves, but it's a long way from a long-term buy.”
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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