Between Trump and Big Tech: Can Alcoa sustain growth in 2026

The American company Alcoa - one of the largest aluminum producers in the world - has already given investors bad news several times since the beginning of this year. But so far, the company has managed to maintain growth in its key financial indicators. Should we bet on it in 2026?

When U.S. President Donald Trump announced on February 10 that he plans to raise duties on imports of steel and aluminum from 10 to 25%, shares of U.S. steel companies soared in price by 5-18%, while the securities of European and Asian steelmakers fell. At that time, it was believed that U.S. companies would benefit from the new protectionist policy of the White House, especially aluminum producer Alcoa. In June, the White House raised the duty on imports of the "winged" metal to 50%.

But Alcoa itself could not support such a decision, since for North American customers they mainly supply metal from their Canadian operations.

Alcoa operates two of the four operating aluminum smelters in the United States. However, three-quarters of North American production is in Canada and approximately 70% of that volume goes to the States.

But, judging by the company's latest statements, it was able to reduce their negative effect on the financial result this year. The situation was saved by the fact that these are not the first such duties in Alcoa's history (10% duties were imposed by the U.S. back in 2018, during Trump's first presidential term).

And in 2026, Alcoa could benefit from defense order growth in the EU and the US.

The share prices of this American company reflect all the negative news and events of the year. In January, the average share price of Alcoa was $36.78. And on September 8, they were traded at $32. Since the beginning of the year, its securities have lost a little more than 15% in value.

Throughout 2025, Alcoa management has been providing investors with troubling news. For example, in the second quarter, the company, by its own estimates, paid about $115 million in import duties Trump when importing metal from Canada to the States. The company was also affected by the decline in global aluminum and alumina prices.

On top of the bad news came from the EU. Alcoa's Spanish project in San Ciprián was put on pause in April 2025 after a nationwide power grid failure. Production restarted only in July, but it will not be fully operational until mid-2026.

For Alcoa's European business, this means another year of waiting before in-house capacity can meaningfully support supply. For 2025, Alcoa expects a net loss of $90-110 million on the San Ciprián asset.

Another pressure on the company is rising energy costs. High energy prices and competition with Big Tech are preventing the U.S. and Europe from developing their own steel and aluminum processing. Washington and Brussels are pouring billions of dollars into upstream and downstream projects to defend themselves against China. But no one can fight the internal threat - the race of AI tech giants.

Trond Olaf Kristoffersen of Norsk Hydro estimates that electricity accounts for about a third of an aluminum smelter's total costs. And in the US, producers are competing for electricity contracts with technology companies that are willing to pay much more to develop data centers. One steelmaker in a conversation with the FT described it as, "It's not Alcoa versus China, it's Alcoa versus Google." The Wall Street Journal cites Alcoa's data: aluminum producers, in order to be competitive in the global market, need to secure contracts to supply electricity at $30 per megawatt-hour for at least 15 years. But in the U.S. they already pay $60-100.

Nevertheless, Alcoa reported a 3.85% year-over-year increase in revenue to $3.1 billion in the second quarter of 2025, above market expectations but down two consecutive quarters.

It also reported net income growth of an impressive 720% to $164 million. Adjusted EPS came in at $0.39 (with a consensus of $0.06).

But what brought about this result? In part, it is the strategy of duty avoidance in the North American market. The company diverted about 100 thousand tons of Canadian metal to other markets.

In addition, the successful sale of a 25.1% stake in the Ma'aden joint venture to the Saudi Arabian state mining company of the same name - the deal was announced on July 1. Alcoa received $1.35 billion in cash and Ma'aden shares. In the third quarter, the company will show an accounting profit from the deal of $780 million.

So far, the market consensus forecast is not as favorable to Alcoa.

Analysts' mean target price is $32.9, up 2.7% from August 8 closing level. The average recommendation is "above market".

In 2025, the market expects revenue of $12.49 bln and EBITDA of $1.88 bln, and in 2026 - $12.33 bln and $1.86 bln, respectively. In other words, the forecast for 2026 assumes a decrease in revenue by about 1.3% and EBITDA by 1.1% relative to estimates for 2025.

But these estimates do not fully take into account the growth of EU operations in 2026 and adaptation to import duties. As well as political news.

According to SIPRI, in 2024, global military expenditures rose to a record $2.72 trillion, with Europe being the main source of growth: +17% year-on-year (including Russia).

In the EU, total defense spending in 2024 reached 343 billion euros (+19% in annual terms), and in 2025 it may reach about 381 billion euros. At the same time, NATO records that in 2025 all allies have reached the benchmark of defense spending of 2% of GDP and above.

All of this means growing demand for metals in military and related programs, from air defense to shipbuilding to aviation.

For Alcoa's profits, the effect of the new arms race will be positive, but indirect.

Its profits can be factored into the growth of production for aerospace: high-strength sheets, plates and extruders for molding parts for airplanes, helicopters, UAVs and weapons systems.

Alcoa is not a major player here, unlike companies like Kaiser Aluminum. However, the company is winning on the principle that a rising tide lifts all boats. It is an upstream player (it mines bauxite, alumina and produces primary aluminum), specialty companies buy from it, and it benefits from the general upward movement of demand.

The blockade of individual producers may also play in Alcoa's favor. The EU does not want to buy aluminum from Russia (supplies will come to an end in 2026), and Chinese suppliers cannot dramatically increase output.

This article was AI-translated and verified by a human editor