Southern Copper Corporation

Southern Copper Corporation reported second-quarter earnings per share of $2.01, beating the Zacks Consensus Estimate of $1.97 and rising 71.8% from the prior-year quarter. Revenues surged 40.6% year over year to a quarterly record of $4.29 billion, though they missed the consensus estimate of $4.37 billion, as higher prices for copper, molybdenum, zinc and silver were partly offset by lower sales volumes. Operating income jumped 65.3% to $2.62 billion, and adjusted EBITDA reached a record $2.86 billion with a margin of 66.6%. Net income attributable to SCCO also hit a record $1.67 billion, up 71.6% year over year. Copper production declined 3.6% to 232,521 tons, including third-party concentrate, as a 12% drop in Peruvian output outweighed a 3.2% increase in Mexico.

Zacks Investment Research has identified Freeport-McMoRan, Southern Copper, and BHP Group as copper producers poised to benefit from the massive growth in AI-powered data centers. The four major hyperscalers have raised their AI capital expenditure budget to $750 billion for 2026, a figure expected to surpass $1 trillion next year, with Moody's estimating more than $3 trillion in total investment over the next five years. An AI-led data center consumes ten times more copper than a conventional one, and while data centers currently account for just 1% of global copper demand, the AI boom could dramatically reshape the landscape. Freeport-McMoRan is expanding reserves and executing smelter projects in Indonesia, Southern Copper is advancing over $20.5 billion in investments across Peru and Mexico, and BHP Group is leveraging strong execution at Escondida and Copper South Australia while shifting toward future-facing commodities. All three stocks carry a Zacks Rank of 3, or Hold.

Southern Copper is benefiting from higher global prices for copper, gold, and silver alongside improved political stability in Peru and Mexico. The stock trades at $175.66, up 93.6% over the past year and 269.7% over five years, with a 20.3% gain year to date. Short-term moves have been mixed, with a 0.7% gain over the past week but a 9.7% decline over the past month. The combination of firmer metals prices and lower perceived risk is drawing fresh attention to NYSE:SCCO, potentially influencing expectations for future production and cash flows.

Southern Copper has been upgraded to a Zacks Rank #1 (Strong Buy), reflecting an upward trend in earnings estimates. The Zacks Consensus Estimate for the company has increased 12.9% over the past three months, with analysts steadily raising their forecasts. For the fiscal year ending December 2026, the miner is expected to earn $7.80 per share. The upgrade places Southern Copper in the top 5% of Zacks-covered stocks, indicating superior earnings estimate revision features that could lead to market-beating returns in the near term.

The Global X Copper Miners ETF, trading under the ticker COPX, delivered a trailing 12-month return of 92.29% through June 23, sharply outperforming the United States Oil Fund, or USO, which was dragged down by contango and a 22.3% drop in West Texas Intermediate crude over the past month. COPX holds 46 copper mining stocks, with top positions Freeport-McMoRan and Southern Copper reporting sharply higher earnings as copper prices rose, a leverage effect that USO cannot replicate. The U.S. added copper to its Critical Minerals list, and demand is projected to rise materially through 2040, driven by grid buildout, electric vehicles, and AI data centers. COPX carries a 0.65% expense ratio on 7.71 billion dollars in assets and pays a trailing dividend of 1.92 dollars, equivalent to a 2.42% yield, while USO pays nothing. The fund’s 52-week range of 41.51 to 99.99 dollars highlights its volatility, and it dropped 11.49% in the past week alone, reflecting mine-level operational risks and jurisdictional exposure in Peru, Chile, and the Democratic Republic of the Congo.

Southern Copper’s zinc production surged 36% year-over-year in 2025, driven by the new Buenavista zinc concentrator, sharply reducing net cash costs for copper to just $0.58 per pound. Management attributed the cost drop mainly to a $0.34 increase in by-product revenue credits, with zinc as the primary driver. The company deliberately prioritized zinc over copper at Buenavista after finding high-grade ore, a strategy that helps insulate profitability against an expected 4.7% decline in copper production next year due to lower ore grades at Peruvian operations.

Southern Copper has surpassed its copper production targets for 2026 and outlined plans to invest over $20.5 billion over the next decade to expand output in Peru and Mexico. Management highlighted ongoing operational challenges including lower ore grades and recent production declines, while linking the long-term investment program to expected demand from AI infrastructure and electrification trends. The company is one of the largest integrated copper producers, with core operations in Peru and Mexico that supply global power, construction, and industrial markets. The expansion agenda is tied to themes such as AI data centers, grid upgrades, and electric transport, all of which rely heavily on copper. Investors will be watching how effectively Southern Copper can execute these projects while managing lower ore grades and balancing capital spending, leverage, and potential shareholder returns.

The iShares Core MSCI Emerging Markets ETF returned 50.4% over the past year, but the median holding among its largest positions gained just 2.7%, revealing that performance was driven by a narrow group of winners. Southern Copper, despite making up only 0.1% of the fund, was the single biggest contributor, while PDD, at 0.5% of the fund, was the largest drag. Among the fund’s 14 largest holdings, exactly half rose and half fell, and the five biggest contributors produced about 96% of the combined gains from those positions. The fund’s five largest holdings already account for 28.8% of assets, with Taiwan Semiconductor Manufacturing at 12.7% being the largest single position, underscoring that return concentration was even tighter than weight concentration.

Copper demand is surging as artificial intelligence data centers require up to 50,000 tons per facility, far exceeding the 5,000 to 15,000 tons needed for traditional data centers. Cloud computing providers like Meta Platforms, Amazon, and Alphabet plan to spend some $765 billion this year on AI infrastructure, according to Goldman Sachs, a figure that's expected to increase to more than $1.6 billion by 2031. S&P Global predicts global copper supply will fall 24% short of demand by 2040, with prices already up 57% over five years. Freeport-McMoRan, the world's largest publicly traded copper company, has seen its stock rise 70% in the past year, while Southern Copper, the second-largest, has more than doubled. The Global X Copper Miners ETF, holding 41 copper miner stocks with net assets of about $8.2 billion, has also more than doubled in price over the same period.