By Paul R. La Monica

Copper prices have popped this year, surging nearly 25% to a little under $5 a pound. But even though that may sound impressive, the reddish-brown industrial metal is actually lagging behind the performance of gold, silver, and the rest of its precious-metal cousins by a wide margin. Gold has soared about 60%, for example. But copper could soon catch up. It might get a further boost thanks to -- what else? -- the artificial-intelligence boom.

The use of demand for copper wiring in new data centers that help power AI should give copper a bigger lift than it has already enjoyed. But copper prices have been incredibly volatile this year and are still well below their record high of just under $6 a pound, which they hit in July before the threat of more tariffs on China from U.S. President Donald Trump sparked a selloff. China is a massive buyer of copper.

Prices have bounced back from summer lows of about $4.35 a pound, though, in part due to supply shortage worries following a fatal mudrush accident late last month at a Freeport-McMoRan mine in Indonesia.

But if you put aside concerns about volatility due to global trade and short-term supply disruptions, copper prices should inevitably head higher. The AI data-center phenomenon is just too big to ignore.

Analysts at Wood Mackenzie, a research firm focusing on the energy and natural resources sectors, said in a report this month that, since copper tends to account for less than 0.5% of a data center's total costs, "developers are largely indifferent to its price, paving the way for sudden demand surges and amplifying price volatility in an already constrained market."

The analysts added that "a single year of doubled buildout could spark price spikes of 15% or more and swiftly deplete stocks."

Higher copper prices could be good news for Freeport McMoRan, which has lagged behind other copper mining stocks this year. It's up just 9% this year. In contrast, shares of Southern Copper have soared nearly 50% in 2025 while three top copper mining exchange-traded funds, the Sprott Copper Miners ETF, iShares Copper & Metals Mining ETF and Global X Copper Miners ETF, have surged from about 50% to 65% this year.

UBS analyst Daniel Major said in a report Monday that he thinks copper prices could climb back to $6 a pound by 2027 and that Freeport McMoRan will benefit from these higher copper prices. He also likes U.K.-based Anglo American and rival copper miner Teck Resources, which announced plans to merge in early September.

Major said he expects continued strong demand for copper next year and in 2027 thanks in large part to "accelerated grid spend." In other words, the electrification trend that is taking place to help fuel the massive power needs of AI isn't going to end anytime soon. That's great news for investors in copper and miners of the metal.

Write to Paul R. La Monica at paul.lamonica@barrons.com

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October 15, 2025 13:45 ET (17:45 GMT)

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