Alcoa shares surge, echoing pandemic-era rally

Published: 2026-04-20 03:15:52 ET AA

In times of war, metal prices frequently skyrocket.

Kevin Smith

Published on 04/20/2026 at 03:15 am EDT

The strikes in Iran - the first phase of which began in June 2025 - account for the Alcoa stock's impressive speculative rally, rather than the impact of tariffs. Management deems the latter neutral, admitting that gains in the domestic market are offset by penalties incurred by the group's international operations.

As a global industry leader, Alcoa stands to benefit from aluminum prices soaring toward historic highs in anticipation of supply constraints. Highly sensitive to energy costs, many producers, which are already under pressure, are being directly impacted by the Middle East crisis.

Alcoa is less vulnerable, notably thanks to its Canadian sites, where a significant portion of production relies on hydroelectricity, and its US operations, where gas prices remain structurally low - and appear set to stay that way as rising shale oil production releases associated gas.

This cyclical upswing eclipses fundamentals that remain challenging. Alcoa's revenue has stagnated for a decade - effectively a sharp decline when adjusted for inflation - while its operating profit remains extremely volatile.

Nonetheless, the group is once again valued at a speculative peak similar to that seen at the peak of the Covid pandemic. As was the case then, its market capitalization has climbed until hitting a ceiling of 3x its book value.

Admittedly, the company posted a return on equity of 19.7% in 2025, a stark contrast to its dismal 10-year average of 2.3%: a testament to just how exceptional the last fiscal year was in every respect.

That said, beyond the surge in aluminum prices, which should contribute more significantly to 2026 results, Alcoa's latest annual bottom line was primarily bolstered by an unusually lenient tax bill, as well as a gain on asset disposals that accounted for nearly all of its pre-tax profit.