Legacy automaker Ford (F) is eager to innovate, and there is good reason for that. Without innovation, it will not be able to readily attract a customer base for its line of pickups and SUVs. But to that end, Ford has set up some new deals with Nvidia (NVDA), among other things, to make its cars more attractive. Yet investors proved skeptical, and Ford shares were down nearly 1.5% in Thursday afternoon’s trading.
Ford is looking to Nvidia to provide the chips necessary to build some new infrastructure in Ford vehicles, with a focus on “AI agents.” The word from Ford’s director of artificial intelligence, Bryan Goodman, is that Ford has several potential use cases in mind for AI, and it will need those new chips to get them there.
Ford is also getting value out of AI elsewhere, particularly in terms of vehicle design. Ford designers typically sculpt vehicles out of red clay, which is then subject to design tests. But Ford notes that it has set up some AI systems that can run these tests in seconds rather than hours. One test involving “computational fluid dynamics” apparently dropped from 15 hours to just 10 seconds, which is an impressive productivity gain.
Final Push
With tariffs about to hit Canada and Mexico—and by extension Ford—reports note that Ford is pushing hard ahead of the tariff deadline to build up its inventory of Canadian import parts as rapidly as possible. And Canada’s autoworker union, Unifor, is reportedly doing all it can to get those components out the door. The more such components leave, reports note, the less likely Ford is to stage a lot of layoffs in those areas impacted by the tariffs.
But even with this extra effort, the total amount of parts that can come out are limited by various dependent events, like how fast their own suppliers can get parts and raw materials to them. With “just in time” management plans in place, the ability to build parts stockpiles is limited, as plans inherently require product to be made as it is needed as opposed to building backlogs.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on four Buys, nine Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 16.65% loss in its share price over the past year, the average F price target of $10.71 per share implies 6.67% upside potential.
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