A Look at Southern Copper’s (NYSE:SCCO) Valuation as Copper Demand Grows on AI Infrastructure Investment

Recent attention has shifted to Southern Copper (NYSE:SCCO) as copper demand climbs, fueled by growing investments in AI infrastructure. Although copper prices have not matched gold’s gains this year, technology projects are creating new opportunities.

See our latest analysis for Southern Copper.

Southern Copper’s share price has gained strong momentum lately, climbing 21.5% over the past month and 44.7% year-to-date as investors position for long-term growth driven by rising copper demand. The total shareholder return stands out as well, topping 22% over the last year and rising more than 200% in the past three and five years. This reflects both market optimism and the business’s earnings power.

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But with such rapid gains and investor optimism running high, the big question now is whether Southern Copper is trading at a bargain or if markets have already factored in all the expected growth.

Most Popular Narrative: 17.4% Overvalued

Southern Copper’s most popular narrative assigns a fair value of $110.54, roughly 17% below the last close of $129.81, suggesting the market is pricing in substantial optimism not fully reflected in analyst expectations.

Southern Copper has announced substantial capital investments totaling over $15 billion, including projects in Mexico and Peru, which are expected to drive future production growth and potentially boost revenue significantly. The company's Buenavista zinc concentrator is now operating at full capacity, anticipated to drive a 31% increase in zinc production in 2025, likely enhancing revenues and improving net margins due to efficient operations.

Read the complete narrative.

What is pushing this valuation sky high? The forecast hangs on bold production growth and unusually strong profit margins. Discover which financial leap powers the narrative’s price target inside.

Result: Fair Value of $110.54 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unexpected project delays or escalating costs could quickly challenge the upbeat outlook and reduce expectations for Southern Copper’s growth story.

Find out about the key risks to this Southern Copper narrative.

Build Your Own Southern Copper Narrative

If you see the numbers differently or want to dig into the data firsthand, you can craft your own view in just a few minutes with Do it your way.

A great starting point for your Southern Copper research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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