Copper Is Priced Like an AI Stock Now. What the Sell-off Means for Freeport-McMoRan.
Copper miners are trading like AI stocks, but Freeport-McMoRan's recent sell-off could be a buying opportunity for long-term investors.
Copper prices have surged, mirroring the performance of AI stocks, as data centers expand to support artificial intelligence. Freeport-McMoRan (FCX -5.55%), a copper-focused company, has felt this impact, with its stock plummeting 18% from its recent high. The copper price has climbed from $3.90 to $6.67 per pound, a 71% increase, since the beginning of 2024.
This rise is fueled by the expansion of hyperscalers' data centers and the U.S. government's efforts to redevelop industrial capabilities within the country. In Q3 2024, Freeport-McMoRan generated $2.4 billion in operating income, marking a 19% increase. During this period, the company sold 749 million pounds of copper at an average price of $6.54 per pound.
The company projects a further 17% rise in copper sales during the fourth quarter. Despite the recent decline, Freeport-McMoRan's stock has risen 30% year-to-date. Looking forward, the company aims to achieve annual copper sales between 4.5 and 5 billion pounds by 2030. This could be achieved by deploying leach technologies, expanding their Arizona facility, and pursuing other growth initiatives.
Global copper demand is expected to grow by 50% by 2040, suggesting a promising outlook for Freeport-McMoRan. However, the company may face volatility as investors closely examine the capital expenditures of leading AI data center operators.
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