Ford (F.US) 45% Gain Wiped Out: AI "Windfall" Expectations Fizzle, Stock Falls Below $12

Title context: Ford (F.US) 45% Gain Wiped Out: AI "Windfall" Expectations Fizzle, Stock Falls Below $12 Text: As economic pressures on US automakers intensify and market expectations cool that Ford Motor Company (F.US) will reap rich rewards from the AI boom, Ford's previous sharp rally has been completely erased. The Michigan-based automaker's shares fell as much as 2.8% on Wednesday before paring losses. The intraday decline pushed the stock below $11.99 for the first time since May, wiping out the last remnant of a 45% gain from earlier this year. At the time, investors rushed in, betting that its battery energy storage business would strike lucrative deals with artificial intelligence companies. "I think the AI halo won't return until Ford actually starts generating returns from its battery energy storage division, and that's a 2027, 2028 story." said Joe Gilbert, portfolio manager at Integrity Asset Management. Gilbert did not buy the stock during the May rally, and he said the plunge has made him more confident in his skeptical stance. Elevated fuel prices, unstable US consumer confidence, surging interest rates, and intensifying competition from international manufacturers are weighing on the auto sector in 2026. Ford and its Detroit peer General Motors Company have both underperformed the broader market this year, falling 8.1% and 5.3% respectively; as of Wednesday's close, the S&P 500 had risen 12% over the same period. Ford CEO Jim Farley also said on Wednesday that supplier issues temporarily affected F-150 pickup production in the third quarter. The company is expected to release quarterly sales data later this week. After Morgan Stanley analyst Andrew Percoco said Ford's energy storage business could strike deals with hyperscale cloud service providers, Ford joined other traditional-economy manufacturing companies swept up in AI hype. Investors rushed to buy the stock, driving it to its biggest monthly gain in 17 years in May. After valuations of tech giants and chipmakers soared to dizzying levels, investors chased other companies that would benefit from the AI revolution, benefiting industrial and auto stocks. Similar expectations also boosted the share price of bulldozer manufacturer Carter's Incorporated Caterpillar, which has risen 70% over the past 12 months, thanks to its power generation equipment business. However, investors and analysts said that for Ford to maintain its appeal tied to the autonomous driving theme, it needs to prove it is building up energy storage customer orders, and to do so in a business that is still years away from profitability. In its most recent earnings report, Ford beat second-quarter expectations and raised guidance, but management did not provide specific updates on the energy storage business or its customers. Although the stock rose on the day the results were released, it suffered a selloff over the following six trading sessions, erasing 10% of its market value. "We already knew in May that this business segment would not monetize until 2028, so that should already have been reflected in the price at the time." said Brian Mulberry, chief market strategist at Zacks Investment Management. The firm holds Ford shares. Mulberry said the recent pullback is a buying opportunity and attributed most of the weakness to overall market sentiment. Meanwhile, AI regulation and data center construction have become political battlegrounds that could hinder the industry's rapid growth. In addition, because the energy storage business relies on technology licensed from China, Ford has come under attack from the Trump administration. US Transportation Secretary Sean Duffy also criticized Ford's joint venture with a Chinese automaker in Spain. Ford pushed back on Duffy's criticism, saying it produces more vehicles in the United States and employs more hourly manufacturing workers than any other automaker. Morgan Stanley's Percoco, whose research helped catalyze the rally, said potential regulatory pressure is a relatively small factor in the stock's decline. Instead, the recent weakness is "mainly driven by outlook concerns, especially the potential impact of higher interest rates and gasoline prices on consumers, as well as persistent commodity and logistics cost inflation and its pressure on margins." The analyst said he still expects the stock to react positively in the future if energy storage customers or backlog growth are announced. As the stock slides, John Kolovos, chief technical strategist at Macro Risk Advisors, said technical indicators look bleak. He said that if the stock continues to fall below $11.99, it will have to find a lower equilibrium level. "This is a bad chart both short term and long term." Kolovos said. "If it can reclaim $13.50 quickly, then the short term would improve, but it's still a long way from a long-term buy."