Ford’s (F) stock has been energized.

Shares of the auto giant have rallied for seven straight sessions, the longest stretch of gains since July 2024. The stock is up 36% in May alone, outperforming the S&P 500’s (^GSPC) 6% advance and General Motors’ (GM) 10% increase.

The why: The new Ford Energy division just locked in a five-year agreement with EDF Power Solutions North America. This gives EDF the ability to procure up to 4 gigawatt-hours of energy storage systems annually. That would equate to a total potential volume of 20 gigawatt-hours over the life of the deal, with deliveries kicking off in 2028.

This is Ford Energy’s first commercial customer. The company is repurposing its Kentucky EV battery plant to produce grid-scale storage systems, which could prove to be a brilliant pivot when you consider Ford’s EV business is still hemorrhaging cash.

Data centers are turning to backup power systems at a record pace as AI-driven electricity demand strains US energy infrastructure. Ford is positioning itself right in the middle of that supercycle with domestically manufactured hardware that grid operators need.

Wall Street chatter: The Street has come out very positive on Ford’s new energy deal.

JPMorgan analyst Rajat Gupta perfectly captured the excitement in a recent note: “Applying a $250/kWh take rate (by 2028) to Ford Energy’s 4 GWh annual EDF volume as a starting point, implies revenues of ~$1 billion annually, and at gross margins of 15–20% (appropriate for a ramp-phase business vs. scaled businesses at ~30%), we estimate Ford could generate ~$250 million in average annual gross profit from this contract … At a full scale of 20GWh, we see potential for ~$4 bilion plus in revenue.”

Bottom line: There’s nothing wrong with trading the new bullish momentum that has surrounded Ford’s stock. Just keep in mind the company is still primarily a low-margin automaker. It will have to execute on this front every quarter.

In other words, Ford isn’t a pure play on America’s AI infrastructure build-out.

Sometimes that expectations mismatch isn’t a perfect setup for more stock price gains.

Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance