Copper prices have surged dramatically over the past few years, significantly boosting the earnings of Freeport-McMoRan (NYSE: FCX). Since the start of 2024, spot copper prices have climbed from $3.90 per pound to $6.67 per pound, a 71% increase. This rise is driven by heavy investments in data centers by hyperscalers and efforts to reshore manufacturing in the U.S. The higher copper prices have translated into strong financial results for Freeport-McMoRan, with operating income growing 19% to $2.4 billion in the third quarter. The company sold 749 million pounds of copper at an average realized price of $6.54 per pound during this period and expects a 17% increase in copper sales in the fourth quarter.
Freeport-McMoRan's stock has become closely tied to the AI data center trade, leading to volatility. While the stock has fallen 18% from its recent high, it remains up 30% year to date. The company aims to increase copper sales to 4.5 billion to 5 billion pounds annually by 2030 through expansion projects and technological advancements. Global copper demand is projected to grow by 50% by 2040, providing a long-term tailwind for the copper miner.
Copper is a critical component in energy infrastructure and data centers, where AI clusters and massive campuses require significantly more electrical power than traditional cloud infrastructure. This close tie to the power grid and data center hardware has caused copper stocks like Freeport-McMoRan to trade in tandem with AI stocks, reflecting the narrative's ups and downs.
Before investing in Freeport-McMoRan, consider that the Motley Fool Stock Advisor analyst team did not include it in their list of top 10 stocks for current investment. The list, which has historically identified high-performing stocks like Netflix and Nvidia, suggests other opportunities with potential for significant returns.