Consider a fact that would have been unthinkable only five years ago.

During the first half of the 2026 financial year, copper earnings at BHP Group Ltd (ASX: BHP) surpassed those from iron ore for the first time in the company's history.

Copper now contributes over half of the group's total earnings.

BHP is no longer predominantly an iron ore producer.

This fundamental shift has profound implications for how the company should be valued by investors.

An Exceptional Share Price Rally

BHP's share price has risen 34% year-to-date and 58% over the past twelve months.

This surge has elevated the company's market capitalisation above $300 billion.

Consequently, BHP has regained its status as Australia's largest listed company from Commonwealth Bank of Australia (ASX: CBA).

The rally has been fuelled by copper, whose price has jumped approximately 43% over twelve months to $13,588 per tonne.

This price already exceeds Goldman Sachs' ambitious 2026 target of $11,200 per tonne.

Sustained Drivers for Copper Demand

Electric vehicles require substantially more copper per unit than traditional petrol cars.

AI data centres can demand up to 50,000 tonnes of copper each for electrical wiring, cooling systems, and grounding.

Global upgrades to power grid infrastructure necessitate massive new investments in copper.

These long-term structural tailwinds accumulate annually, while new copper mines typically take 15 to 20 years to develop and bring online.

Supply simply cannot ramp up quickly enough to meet projected market needs.

BHP plans to grow its copper-equivalent production by 3% to 4% annually through 2035, strategically expanding one of the world's most valuable copper portfolios.

In October 2025, the company reinforced this commitment by allocating over $550 million to expand its Olympic Dam copper mine.

Morgan Stanley Maintains a Positive Outlook

Following a 56% rally, investors naturally question whether the most significant gains have already been realised.

Morgan Stanley believes they have not.

The broker maintains an Overweight rating on BHP shares with a price target of $67.50, suggesting further potential upside from current levels.

This bullish thesis is based on copper demand consistently outpacing supply, iron ore operations generating robust cash flow to fund growth, and the Jansen potash project establishing a third major earnings pillar that many analysts have yet to fully value.

Potential Risks to Consider

As a commodity company, BHP is exposed to price volatility; commodity prices can fall as rapidly as they rise.

After a 58% gain, the margin of safety for new investors is narrower than it was a year ago.

A slowdown in Chinese industrial demand remains the primary risk to monitor.

Investors purchasing shares today are effectively paying for a future growth narrative that has yet to fully materialise.

Final Analysis

BHP shares are not trading at a discount.

However, the company is undergoing a strategic transformation from an iron ore giant to a global miner led by copper.

This transformation is being driven by multi-decade secular trends, not short-term cyclical factors.

For patient investors capable of weathering commodity price volatility, BHP shares appear positioned to deliver compounding returns over the long term.