The recent selloff in AI-related stocks has extended to copper producers, creating a potential buying opportunity for long-term investors. The downturn reflects broader concerns about AI infrastructure spending, which has impacted companies like Freeport-McMoRan (NYSE:FCX).
Goldman Sachs estimates that AI expectations are a major driver of current copper prices, though S&P Global projects that AI and data centers will only account for about 10% of future demand. Even without the data-center sector, S&P Global forecasts a significant copper supply gap of 7.5 million tonnes annually by 2040.
The article recommends established copper producers like Freeport-McMoRan and Southern Copper over speculative developers, citing the rising cost of capital as a risk factor for less stable companies. The analysis was authored by Dom Einhorn, publisher of The Copper Wire, who holds positions in mining equities not mentioned in the article.