Up 109% in a Year, the Best AI Trade Isn’t a Chip Stock at All

Up 109% in a Year, the Best AI Trade Isn’t a Chip Stock at All

Gerelyn Terzo

Tue, September 8, 2026 at 11:35 PM GMT+3 5 min read

Quick Read

• Copper miners Southern Copper and Freeport-McMoRan surged 109% and 64% over the past year, tripling NVIDIA's 34% gain on AI infrastructure demand.

• S&P Global projects 50% copper demand growth by 2040, and data centers could consume 12% of U.S. electricity by 2028.

• Southern Copper's operating cash cost per pound collapsed from $0.63 to $0.05 in Q2 2026, driving a record 66.6% EBITDA margin.

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On Sunday afternoon, All-In co-host and Social Capital founder Chamath Palihapitiya posted two things minutes apart. First, a declaration: "It has arrived. The next 18mo will be wild." Then, a quote-post about a copper price record. The juxtaposition was the trade thesis. Copper on the LME had just touched $14,533 per ton, an all-time high according to multiple wire services, with data center demand helping drive the surge.

On the All-In podcast days earlier, Palihapitiya framed the moment in plain terms: "AGI has basically been here since the beginning of the year." The next phase is diffusion, and diffusion runs on wire, transformers, and substations alongside accelerators.

Performance Gap Investors Missed

Measured to the September 4 close, the scoreboard is jarring: Southern Copper is up 109%, Freeport-McMoRan 64%, and NVIDIA 34% over the trailing year. The copper miners are running roughly triple the pace of the flagship AI chip name, and both extended their gains as the LME record was set. Southern Copper (NYSE:SCCO) rose 4.9% on September 8 alone, while Freeport-McMoRan (NYSE:FCX) added 5.3%. NVIDIA (NASDAQ:NVDA) slipped 2% the same session.

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Why Copper Is the Physical Layer of AI

S&P Global projects global copper demand reaching 42 million metric tons by 2040, a 50% increase driven by forces like electrification, AI, data centers, and defense modernization. More than 65% of the world's copper already flows into electricity delivery applications. Other signals also suggest the supply/demand dynamic is strengthening. The U.S. Geological Survey added copper to its List of Critical Minerals in November 2025, and the Department of Energy expects data centers to consume up to 12% of U.S. electricity demand by 2028. Every megawatt of new AI compute pulls tons of copper into windings, busbars, cable, and switchgear before a GPU ever draws power (we profiled seven of the non-chip companies feeding this buildout, from power to cooling to the metals layer, in a free report you can grab here).

Southern Copper: The Anchor Trade

Southern Copper's fundamentals are running with the price. In Q2 fiscal 2026, reported on July 21, the company posted EPS of $2.01 on revenue of $4.29 billion, a 40.58% year-over-year gain and its fourth consecutive earnings beat. Adjusted EBITDA reached $2.86 billion at a 66.6% margin. The eye-catcher: operating cash cost per pound of copper collapsed to $0.05 from $0.63 a year earlier as silver, molybdenum, and zinc by-product credits surged.

Chairman German Larrea described it as "another exceptional quarter, registering record-breaking results in sales, adjusted EBITDA, and net income" in the company's Q2 2026 8-K filing. Southern Copper also carries a $20.5 billion capital investment program for the decade, headlined by the Tía María project in Peru, targeting first production in H2 2027.

Freeport-McMoRan: America's Copper Champion

Freeport CEO Kathleen Quirk has staked out the domestic supply narrative. Q1 fiscal 2026 delivered adjusted EPS of $0.57 versus $0.47 consensus, a 21.79% beat, on revenue of $6.23 billion. Realized copper averaged $5.78 per pound. The Grasberg mud rush in September 2025 remains the swing factor: Indonesia subsidiary PTFI is expected to run at roughly 65% of capacity in H2 2026, reaching full capacity only by year-end 2027. Freeport's growth pipeline includes innovative leaching targeting roughly 800 million pounds per year by 2030, plus El Abra, Bagdad, and Kucing Liar. The forward P/E sits at 18, versus 39 for Southern Copper.

What to Watch Next

Two caveats belong in the notebook. Southern Copper trades at roughly 13x book value, and analyst consensus sits below the current price. Both miners are also exposed to volatile forces like commodity-price mean reversion, Peru political risk, and the sustainability of the by-product credit tailwind that flattered Southern Copper's cash cost. If Palihapitiya's 18-month window plays out, the copper trade rides electrification. If AI infrastructure spend cools, the same operating leverage that lifted these stocks 60% to 120% in a year cuts in reverse.

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