Copper prices started 2026 on a strong note, supported by demand from electric vehicles, renewable energy projects, data center growth and grid modernization. At present, data centers account for a mere 1% of global copper demand. However, the astonishing growth of the artificial intelligence (AI)-powered data centers could change the entire landscape dramatically in the near future.
Copper is an essential component of the AI ecosystem including electrical wiring in data centers, power grids, transformers and transmission infrastructure. An AI-led data center consumes 10 times more copper than a conventional data center.
The four major hyperscalers raised their AI capital expenditure budget to $750 billion for 2026. This figure is set to cross $1 trillion next year and is likely to rise further beyond 2027. Moody’s estimated more than $3 trillion in capital investment for AI data centers by these four giant hyperscalers in the next five years.
At this stage, we have narrowed our search to three big copper producers for investment with a long term approach. The companies are: Freeport-McMoRan Inc. FCX, Southern Copper Corp. SCCO and BHP Group Ltd. BHP. Each of these stocks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of the three above-mentioned stocks year to date.
Image Source: Zacks Investment Research
Freeport-McMoRan Inc.
Freeport-McMoRan is conducting exploration activities near existing mines to expand reserves. It is expected to gain from progress in exploration activities that will boost production capacity.
FCX is executing several smelter projects in Indonesia. FCX is also well-positioned to benefit from automotive electrification, which is a positive for copper, as electric vehicles are copper-intensive. The company's efforts to reduce debt are also encouraging. FCX’s solid financial health also bodes well.
Freeport-McMoRan has an expected revenue and earnings growth rate of 9.5% and 51.4%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 7.6% in the last 30 days.
Southern Copper Corp.
Southern Copper’s investment case is strengthened by its industry-leading copper reserves, expanding project pipeline and favorable long-term demand for copper and key by-products. SCCO is advancing more than $20.5 billion of investments across Peru and Mexico, creating a visible path to higher production over the next decade.
An expected grade recovery, continued progress at Tía María and a tight copper market support an optimistic outlook, with SCCO positioned to deliver sustained growth and attractive shareholder returns.
Southern Copper has an expected revenue and earnings growth rate of 26.6% and 46.6%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 3.9% in the last 30 days.
BHP Group Ltd.
BHP Group remains a high-quality diversified miner with leadership in iron ore and growing leverage to copper and potash. Recent updates point to resilient iron ore volumes despite weather disruption, strong execution at Escondida and Copper South Australia, as well as progress on Jansen logistics ahead of production.
BHP’s strategic shift toward future-facing commodities like copper and potash positions it well to benefit from global decarbonization and trends. Strong cash generation, efforts to lower debt and portfolio actions support funding flexibility.
BHP’s technology partnerships in haulage, conveyors, copper leaching and renewable energy support efficiency, safety and decarbonization efforts. BHP’s low-cost iron ore base, an expanding copper pipeline and long-life Jansen potash project provide durable growth avenues.
BHP Group has an expected revenue and earnings growth rate of 12.6% and 43.7%, respectively, for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 1.2% in the last 60 days.
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Freeport-McMoRan Inc. (FCX): Free Stock Analysis Report
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Southern Copper Corporation (SCCO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).