By Liam Denning | Updated on Jun 08, 2026 at 01:30 PM
Ford Motor Co. is now worth $11.4 billion more than it was on May 12. Is it, though? Its stock market value has certainly expanded by that much and was up by almost $22 billion at the recent peak. The reason is fairly straightforward: Morgan Stanley published an analyst note that day alerting investors of the potential for Ford’s new grid-battery business to tap into the artificial intelligence boom. Voila: The 122-year-old car company was now an AI stock.
Is it, though? The sudden transfusion of AI hype to unlikely candidates probably says more about the hype than the candidate. We’ve seen this play out before in that now seemingly ancient precursor, the technology bubble of the late 1990s.
Ford’s $2 billion pivot of an electric vehicle-battery plant, undone by Republicans’ war on green, to one producing batteries for electricity networks is a smart way of making lemonade out of lemons, given the demands of data centers (see this) .
It doesn’t, however, look like $11 billion worth of lemonade, let alone $22 billion. Morgan Stanley put a preliminary range of about $4 billion to $31 billion on Ford Energy, with $10 billion being the base case. But its valuation largely rested on a multiple of projected Ebit in 2029 of 17.5 times. This compares with Ford’s own multiple of about 5 times, but it does have the benefit of being far lower than the 30 times that Morgan Stanley puts on Tesla’s energy business. For investors, that benefit is corroded somewhat by using Tesla as a valuation benchmark, an act akin to masochism. When the stock market is this enamored with a theme, “relative valuation” can become a technical term for “keep buying.”
There are several aspects of Ford’s Energy business that warrant conservatism. It won’t begin deliveries for at least another year, and while the recent contract win with EDF Group is important validation, pricing and economics are unknown. Ford’s licensing of technology from China’s Contemporary Amperex Technology Co. Ltd., ahead of tightening foreign entity of concern rules, is real enough, but it is unclear how far that extends to updates or capacity expansions in the future. Plus, according to Morgan Stanley’s calculations, manufacturing tax credits constitute 85% of Ford Energy’s gross profit in 2029, the year before they begin to quickly phase out.
The market’s implied $11 billion valuation for Ford Energy implies not just rapid growth in demand, which seems plausible enough in these times. It also bakes in significant expansion of Ford’s manufacturing capacity, an extension of tax credits, a rapid reduction in costs, a future sale at a punchy multiple or some combination of these.
More than 90% of the rally in Ford’s stock reflects a bigger multiple, not bigger near-term earnings. And when a legacy automaker bursts into an obliquely related growth segment, it rather suggests the door is open to more competition finding its way in, with negative implications for margins and returns.
Ford isn’t the only example of this spreading aura of AI. The utilities sector, typically the defensive hedge to the market’s obsession of the day, has morphed into a bet on AI-fueled growth . It now even has a defining megadeal in the form of NextEra Energy Inc.’s offer for Dominion Energy Inc., in the heart of “datacenter alley.”
There are echoes of the tech bubble nearly three decades ago, when equipment and infrastructure providers were caught up in the spiral. Shares of Corning Inc. quintupled in value in the space of a year, peaking in early September 2000 as Web 1.0 fever spread to forecasts for optical fiber demand. Corning paid 160 times projected revenue for a controlling stake in an optical components business later that same month, part of an acquisition spree predicated on booming internet traffic. Corning’s stock wouldn’t regain that September peak for another 25 years — and it has since more than doubled due to optical fiber demand from, yes, hyperscalers.
Flextronics, which became Flex Ltd., took a similar trajectory; it morphed, in the market’s mind, from a cyclical contract manufacturer of electronics to the indispensable foundation of ever-proliferating networks being built by the likes of Cisco Systems Inc. It eventually reattained its 2000 peak some 24 years later. The stock has risen 155% so far this year.
The AI narrative is all-encompassing and compelling. AI will almost certainly ultimately create value, and probably a lot of it — as did the roll-out of the Internet, along with prior breakthroughs (like automobiles, for instance). Similarly, though, a lot of folks will get burned in the process, with Friday’s broad sell-off a reminder of that. The technology this time centers on indifferent, calculating machines. The narratives, and pricing, remain all too human.
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