Ford Stock Is Off to the Races. Can Its 55% Rally Continue?

Ford Motor Company (NYSE: F) has had a rough couple of years. Tariffs have hurt the bottom line, and Ford's electric vehicle business just never caught on as hoped. The company took a $19.5 billion noncash charge at the end of 2025, including $8.5 billion for planned EV models it had canceled.

But give Ford credit for turning lemons into lemonade. The company is using its EV assets to build battery energy storage systems (BESS) for data centers, utilities, and other industrial customers. This new subsidiary, called Ford Energy, has investors racing to buy the stock.

Shares have raced higher, soaring 55% over the past year to prices Ford hasn't seen in four years. It makes for a fascinating story, but one that investors probably shouldn't participate in at this point. Here's why it makes sense to pass on Ford stock right now.

Image source: The Motley Fool.

Ford Energy is giving the company a spark

Data centers are popping up faster than the electrical grid can keep up. Many companies are turning to on-site power generation and energy storage.

A few weeks ago, Ford announced a five-year deal to supply EDF Power Solutions with up to 4 gigawatt-hours (GWH) of annual storage capacity, beginning in 2028. The company's goal was to supply at least 20 GWH annually, so this deal essentially represents about 20% of Ford Energy's planned capacity over five years. It's a very big score.

Wall Street seems to like what it's seeing. Morgan Stanley recently valued Ford Energy at $10 billion, which helped ignite the stock's recent surge. Even at Ford's higher price, that $10 billion puts the energy storage business at about 15% of the company's total market cap. Not bad for what was initially an enormous loss.

But a slowing core business should keep investors up at night

Morgan Stanley's favorable view of Ford Energy hinges on its likelihood of winning more deals with its licensed technology and potential upside from energy storage tax credits. That's all great, but investors should remember that this business is still a year or two away from making a meaningful financial impact.

In the meantime, Ford makes its money from vehicle sales, and sales dropped 14% in April compared with the prior year. It's a challenging market right now. Gas prices have soared since the war broke out in Iran. Consumer sentiment has dropped, as people struggle with higher living expenses. Lastly, there's an ongoing aluminum shortage that's disrupted production of the F-150, arguably Ford's most important vehicle.

One-time tariff reimbursements juiced Ford's profits in the first quarter of 2026, but it wouldn't be a shock if that momentum faded over the next several quarters as economic reality sets in. Only about a quarter of the 24 Wall Street analysts on CNN Business have a buy rating on Ford.

Ford Energy has made the stock exciting again. However, there's far more to like about the long term than right now, and for that reason, this rally isn't worth chasing.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.