"AI or Bust": Ford Shares Wiped Out May's Rally — Confidence in AI Profits Has Weakened

By October, Ford’s stock had lost all the gains it had made in the spring due to expectations of lucrative deals with AI companies. Investors are having to weigh the long-term prospects of the new energy storage business against mounting pressure on the core automotive operations.

During trading on September 30, Ford shares fell 2.8% and dropped below $11.99 for the first time since Ma, according to Bloomberg. This decline wiped out the remaining gains from the spring rally, during which the stock rose 45%, the agency noted. Although the stock later recouped some of its losses, the automaker’s shares ended the final trading session of September 8.1% below their year-to-date level, while the S&P 500 gained 12%.

Morgan Stanley analyst Andrew Percoco attributes the decline in the stock primarily to the worsening outlook for Ford’s automotive business. In the spring, his comments helped spark the spring rally. Now, Percoco points to risks to demand and the ongoing rise in the cost of raw materials and logistics, which is putting pressure on the automaker’s profitability.

Joe Gilbert, a portfolio manager at Integrity Asset Management who did not buy Ford during the May rally, sees the pullback as confirmation of his skepticism. “I don’t think interest in Ford as a beneficiary of the AI boom will return until the company starts seeing returns from its data center energy storage division, which is expected around 2027–2028,” Bloomberg quotes him as saying.

A decline in interest in electric vehicles has sharply reduced the automotive industry’s demand for batteries. In May, Ford launched Ford Energy and announced that it would repurpose its electric vehicle battery production facilities to manufacture energy storage systems for the rapidly growing data center industry serving neural networks. As The Wall Street Journal explained at the time, the most optimistic investors saw Ford’s stock as an opportunity to profit from the AI boom.

Ford decided to enter the energy storage market after suffering heavy losses in electric vehicle production: according to Morningstar, this segment has cost the company more than $16 billion in losses since 2022. But Morningstar analyst David Whiston warned even then that he did not expect Ford’s new division to turn a significant profit before the end of 2027.

Nevertheless, investor enthusiasm in May drove the stock price to a multi-year high. According to Yahoo Finance, Ford shares closed at $17.44 on May 29—the highest level in more than four years. “The company announced Ford Energy back at the end of last year, and the market barely reacted. Suddenly, the market decided to view Ford as a play on data centers,” said Whiston of Morningstar, describing the shift in sentiment.

The U.S. stock market ended September 2026 better than expected, largely thanks to a bet on artificial intelligence, according to Yahoo Finance. “It’s AI or bust,” said Steve Sosnik, chief strategist at Interactive Brokers. According to him, the Nasdaq and S&P 500 outperformed other major indices, but “if you dig deeper, there’s a lot that’s not encouraging.” According to UBS Chief Economist Arenda Kapteyn, investments in AI and the “wealth effect”—an increase in consumer spending driven by rising stock prices of AI companies—account for at least 80% of U.S. economic growth.

According to FactSet, the consensus analyst recommendation for Ford shares rose from “neutral” (Hold) to “overweight” in the third quarter. This means that, on average, analysts are advising investors to hold a larger weighting of these shares in their portfolios than their share in the sector index. Currently, eight of them recommend “Buy” or rate the stock as “Overweight” (compared to six three months ago), while 13 recommend “Hold” (down from 15). One analyst rates the stock as “underweight” (three months ago, two analysts had given “underweight” or “sell” ratings). The analysts’ average target price of $16.17 per share implies a 34% upside potential for Ford shares.

Brian Mulberry, chief market strategist at Zacks Investment Management, sees the pullback as a buying opportunity and attributes most of the decline to overall market sentiment, according to Bloomberg. His firm holds shares in Ford. “Back in May, we knew that this business [data center batteries] wouldn’t start generating revenue until 2028, so that should have already been factored into the price back then,” he said.

Percoco of Morgan Stanley also hopes that Ford’s energy division will help support the automaker’s stock price, according to Bloomberg. He said the stock should react positively to future announcements regarding new customers or an increase in the order book for energy storage systems.

This article was AI-translated and verified by a human editor