By Nate Wolf

The prices of both aluminum and copper surged in 2025, but copper is the clear winner in the months ahead, J.P. Morgan says. That is bad news for Alcoa as the aluminum producer heads into fourth-quarter earnings season.

J.P. Morgan downgraded shares of Alcoa to Underweight from Neutral in a research note Thursday, though it lifted its target for the price to $50 from $45. While copper is poised to keep rising, aluminum may lag behind, meaning the stock has gotten too expensive, the bank said.

Shares of Alcoa, which reports its quarterly earnings on Jan. 22, tumbled 3.7% to $60.45 on Thursday. London-traded aluminum futures were up narrowly, having climbed 25% in the past year.

Alcoa has outperformed not just other metals stocks, but aluminum itself. Having climbed 67% in the past year despite U.S. tariffs, the stock now trades at 7.1 times the spot price of a ton of aluminum. That multiple is well above the five-year average of 4.7 times, J.P. Morgan said.

"We view the risk-reward skewed negatively at current valuation," wrote analysts led by Bill Peterson.

New supply from Indonesia over the next two fiscal years and potential price sensitivity among Chinese buyers present risks for aluminum, the analysts said. Inventories also look healthy heading into the usual restocking period around the Lunar New Year, which could temper demand, they added.

"We acknowledge that our call may be 'early' given what appears to be a risk-on environment to start the year," wrote Peterson. "With our assumption of looming supply, we anticipate aluminum pricing could decouple from copper, leveling out and driving downside in AA shares."

Copper miners are a better play, J.P. Morgan argued. The firm reiterated an Overweight rating for Freeport-McMoRan and boosted its target for the stock to $68 from $58. Freeport stock was down 3.1% to $53.78 on Thursday.

Global copper prices have soared to record heights in recent weeks, driven by both growing U.S. consumption and disruptions to production at mines.

Among those was a mudslide that killed seven workers at Freeport's Grasberg mine in Indonesia last September. The disaster knocked Freeport stock off course, but "management's track record and recovery plan have reinforced investor confidence," Peterson said.

Freeport shares have a 95% correlation to copper prices, J.P. Morgan noted. Going forward, the firm sees "lagging mine supply" and demand for copper in clean-energy applications supporting continued high prices.

Freeport is also scheduled to report quarterly earnings on Jan. 22.

Write to Nate Wolf at nate.wolf@barrons.com

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January 08, 2026 13:00 ET (18:00 GMT)

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