Why Ford Stock Soared Today
Key Points
Morgan Stanley predicts Ford Motor Co. is about to win multiple battery contracts for electricity storage.
The analyst sees Ford earning $500 million or more annually from energy storage.
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Shares of Ford Motor Company (NYSE: F) stock soared 9.8% through 12:10 p.m. ET Wednesday -- and the reason has nothing to do with trucks.
Instead, Ford soared on Morgan Stanley's positive comments about Ford's... energy business.
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Wait. Ford has an energy business?
Well, not yet, it doesn't. Not really. But according to MS, Ford might have an energy business soon -- much like Tesla (NASDAQ: TSLA) does.
As TheFly.com explained last night, Ford recently secured a license from China's Contemporary Amperex Technology Co., Limited battery giant, which gives Ford the right to produce batteries in the U.S. Contrary to what you might expect, though, Morgan Stanley doesn't expect Ford to use this license to produce batteries for electric cars and go head-to-head with Tesla in that market. Instead, it thinks Ford will use it to produce batteries for energy storage.
Next, MS expects Ford to turn around and use this storage to power "large commercial customers, and potentially hyperscalers" in the artificial intelligence industry.
What's next for Ford stock?
Yes, you read that right. Strange as it sounds, Morgan Stanley just told us Ford is an AI stock.
Is MS right about that? We shouldn't have to wait long to find out, because according to the analyst, Ford is likely to announce one or more energy storage deals with large customers "over the next few months." It remains to be seen how profitable these deals will be (if they happen at all). Morgan Stanley, however, is penciling in operating profits of $500 million to $600 million per year.
Now consider that S&P Global Market Intelligence data show Tesla earning profit margins twice as high from its energy business as it does selling electric cars. This could be great news for Ford stock.
Should you buy stock in Ford Motor Company right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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