Alcoa Stock Has Surged Higher on Aluminum Price Spike. 1 Analyst Still Thinks It Can Gain 14%.

Traders around the world had to deal with another crisis when, in retaliation for continued attacks by the U.S. and Israel, Iran attacked two aluminum product sites in the Middle East, disrupting the global aluminum supply chains. The Middle East accounts for 9% of the global aluminum smelting capacity. Supply was already disrupted in the Persian Gulf due to the closure of the Strait of Hormuz. A direct attack on the production sites themselves has worsened the matter, causing aluminum futures to surge.

Before the war, the aluminum market was operating at a surplus supply of 200,000 tons. This could turn into a deficit of 1.3 million tons due to the disruption at the Al-Taweelah production facility alone, which produced 1.6 million tons of the metal last year. An aluminum price surge is on the cards, and Alcoa stock (AA) is reacting accordingly.

About Alcoa Stock

Alcoa is involved in the production of bauxite, alumina, and aluminum products. The company was founded in 1988 and had a pivotal role in shaping the development of the industry over the decades. It is vertically integrated across the complete aluminum value chain and is headquartered in Pittsburgh, Pennsylvania.

AA stock struggled since the election of Donald Trump and saw its lowest point during the April 2025 tariff war, causing the stock’s value to halve in a matter of six months. It has posted a great recovery since and is up 160% since those early social media posts announcing the tariffs.

A forward price-to-earnings ratio of 10.28x looks attractive when one considers the average Materials sector P/E of 15.97x. But there’s a good reason for this discount, and it has a lot to do with the future earnings potential. Wall Street consensus is that the company will not be able to grow its earnings after 2026. This also means that if the political tensions were to ease and aluminum prices came back down, investors entering at these prices will have very bleak prospects. 

With all the potential of the stock, this one risk makes it hard to pull the trigger on buying at these levels.

Alcoa Beats Wall Street Earnings Expectations

Alcoa announced its Q4 2025 earnings on Jan. 22. It posted an EPS of $1.26 vs. an estimated $0.99, comfortably beating Wall Street expectations. During the quarter, the firm posted annual production records at five of its smelting facilities. The year-end cash position stood at $1.6 billion, thanks in part to the healthy free cash flow generation of $594 million during the year. 

For Q1 2026, management already hinted at headwinds in both alumina and aluminum segments, totaling around $100 million. On a positive note, it expects CBAM to have a net positive impact of $10 per metric ton during the ongoing year. For the full year 2026, the company expects alumina production to be 9.8 million tons at the midpoint and shipments to be 11.9 million tons. Aluminum production is expected to be around 2.5 million tons as well. The Q1 2026 earnings report is set to be announced on April 16.

What Are Analysts Saying About AA Stock?

Christopher LaFemina of Jefferies expects the broader industry to update their financial models with meaningful earnings updates after the change in the metal’s prices. Given that this supply shock is also accompanied by rising energy prices, operating costs are going to rise, causing margins to be squeezed. Two weeks ago, Citi analyst Alexander Hacking raised his price target on the shares from $54 to $76, an increase of about 13% from current prices. He had pointed out Aussie permits and asset sales as the prime reasons for the update, but things have drastically changed since then, and there is potential for even more upside in the current circumstances!

Currently, 12 analysts cover the stock on Wall Street, with six of them maintaining a “Hold” rating. This neutral stance is likely to change once these analysts update their models. For now, the mean target price stands at $66.18, and the stock is sitting around that level. Investors looking to gain from the current spike in aluminum futures would like to take a position in the stock now before analysts come up with their latest analysis.

On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.