Copper Prices Approach Record Highs as AI Data Centers and Supply Tightness Converge: Which US Copper Stocks Are Worth Watching?

TradingKey - International copper prices have continued to strengthen recently. As of August 21, London Metal Exchange copper prices briefly rose to $14,363 mid-week, just shy of the all-time high of $14,521. Meanwhile, Freeport-McMoRan (FCX), Southern Copper (SCCO), BHP (BHP), and other copper mining stocks strengthened in tandem.

Copper Price Weekly Chart, Source: TradingView

The core driver behind this round of copper price gains lies in the continuous momentum on both the supply and demand sides. On the supply side, Congo's restrictions on copper concentrate exports, supply disruptions at mines and smelters, and declining inventories are tightening the spot market; on the demand side, AI data centers, power grid upgrades, and electrification investments are providing medium- to long-term incremental demand.

For investors, if copper prices remain elevated, close attention should be paid to these three targets in the US stock market: Freeport-McMoRan, Southern Copper, and BHP.

Freeport-McMoRan: High-Elasticity Target for Rising Copper Prices

Freeport-McMoRan is one of the most direct large-scale copper investment targets in the U.S. stock market. Its major assets include U.S. copper mines and the Grasberg mine in Indonesia. Over the past month, FCX has gained approximately 17%, driven significantly by rising copper prices.

In terms of operating data, the company's average realized copper price reached $5.78 per pound in the first quarter of this year, up about 30% year-over-year from $4.44 per pound in the prior-year period. Meanwhile, its net cash cost per unit fell from $2.07 per pound to $1.91 per pound over the same period. The figures demonstrate that FCX has high profit elasticity during periods of rising copper prices, with incremental revenue from higher prices converting to a large extent into earnings and free cash flow.

Institutional investors are also bullish on FCX. According to analyst commentary recently cited by Dow Jones, among major copper producers, FCX remains viewed as one of the more attractive copper investment options compared to peers that have already shown strong recent performance.

Therefore, if the investment thesis is to bet directly on continued copper price increases, FCX may offer greater upside elasticity among the three companies. However, it is worth noting that if copper prices undergo a rapid pullback, FCX's earnings outlook and stock price will typically face a more direct impact.

SCCO: Low-Cost Advantage Stands Out, Rising Copper Prices Translate More Easily Into Profits

Compared with FCX, one of SCCO's biggest advantages is its lower costs, along with a higher concentration in its copper business.

The company's second-quarter data showed that sales reached $4.289 billion, up 41% year-over-year, while earnings per share reached $2.01, up 71% year-over-year. Wall Street currently projects SCCO's full-year 2026 revenue to reach approximately $16.8 billion, a year-over-year increase of 25%, with EPS expected to grow 49% to $7.66.

The boost from high copper prices on profit margins is especially pronounced. SCCO's second-quarter cash cost of copper production before byproduct credits was approximately $2.29 per pound; however, due to rising prices for byproducts such as silver and molybdenum, unit cash cost after byproduct credits was only about $0.05 per pound, compared to $0.63 per pound in the same period last year. This means that in the current environment where copper prices exceed $6 per pound, the company enjoys a very large spread between price and cash cost.

For investors, the investment thesis for SCCO is not just rising copper prices, but more importantly, margin expansion driven by rising copper prices combined with low-cost mines.

IBD currently gives SCCO a Composite Rating of 94 and notes that the company's stock price is consolidating near all-time highs, with a key technical breakout level at approximately $219.04.

BHP: Copper Overtakes Iron Ore for the First Time as Company's Largest Profit Source

The key difference between BHP and FCX or SCCO is that BHP is not a pure-play copper miner, as it also operates iron ore, coal, and potash businesses. Consequently, its stock price shows relatively lower elasticity to rising copper prices, but this business diversification also reduces the risk associated with a decline in standalone copper prices.

The latest financial results show that BHP's underlying profit for the fiscal year ending June 2026 reached $13.2 billion, up 30% year-over-year and beating Visible Alpha's estimate of $12.66 billion. More importantly, operating profit from the copper segment reached $18.19 billion, surpassing the iron ore segment's $14.53 billion for the first time to become the company's largest source of profit.

The copper business currently accounts for approximately 55% of BHP's EBITDA, with a profit margin of around 70%. During the same period, the company's net debt fell from $12.9 billion to $8.7 billion, while a full-year dividend of $1.72 per share was declared, the highest level in four years.

In terms of production, BHP produced 1.953 million metric tons of copper in fiscal year 2026. Although declining ore grades at Escondida led the company to forecast fiscal 2027 output dropping to between 1.65 million and 1.80 million metric tons, management plans to increase copper output by up to roughly 40% by 2035, primarily driven by projects in Chile, Australia, and Argentina.

Reuters Breakingviews notes that with the copper business contributing 55% of EBITDA, BHP's case for the market to value it more like a major copper producer is gaining traction.

Summary

If investors primarily judge that copper prices will continue to hit new highs, FCX's stock price and earnings elasticity may be more direct; if they focus more on mine quality, low costs, and profit margins, SCCO is more representative; if they wish to gain exposure to rising copper prices while mitigating single-commodity price risk, BHP's business structure is more balanced.

It should be noted that the biggest current risk stems from copper prices themselves already hovering near record highs, with LME copper approaching its historic high of $14,521 per tonne, increasing the risk of a short-term pullback. However, JPMorgan pointed out that due to persistent supply tightness and the US-China competition for resources, the bottom and top ranges of copper prices will continue to shift higher in the second half of the year, with potential to move toward the target of $15,000 per tonne.

Therefore, investing in copper mining stocks currently requires distinguishing between two rationales: long-term copper demand growth remains supported by AI data centers, power grids, and electrification, but short-term copper prices already reflect strong expectations of supply tightness. For FCX, SCCO, and BHP, if copper prices can stay at high levels over the long term, there remains room for further improvement in profits and cash flow; however, if spot tightness eases and copper prices retreat rapidly from record highs, these three stocks could also undergo significant valuation revisions.