Nucor's free cash flow is set to flip from negative to $4B by 2028, but the tariff shield that drives pricing power may not be permanent. Here is the risk event.
Nucor Corporation is shifting from a $20 billion capital spending cycle into a phase where free cash flow could jump from a negative $188 million in 2025 to over $4 billion by 2028, according to a recent analysis by Ozeco on Crack The Market's Substack. The steelmaker's bet rests on two pillars: durable tariff protection and a surge in demand from AI data centers and federal infrastructure projects.
The 50% Section 232 tariffs, now expanded to cover about 600 derivative products, have already cut import share from 22% to 14%. That has boosted domestic pricing power. Nucor's management points to demand from AI data centers, naval shipbuilding, CHIPS Act fabs, and federal infrastructure as longer-term drivers. The company has retired 20% of its shares since 2017 and authorized a $4 billion buyback, roughly 8% of its market cap.
At roughly 8 times forward EBITDA, the stock trades below the broader market's multiple. Nucor has paid dividends for 53 consecutive years. Hedge fund interest has increased: 59 funds held NUE at the end of the first quarter, up from 44 in the prior quarter. The shares traded at $253.40 on June 8, with a trailing P/E of 25.24 and a forward P/E of 18.28, according to Yahoo Finance.
The bullish case assumes the tariff regime stays in place. Any shift in trade policy, a rollback or a change in administration, would erode the pricing advantage that underpins the FCF forecast. The capital program's end is a known event; the scale of demand from data centers and reshoring is less certain. If AI campus buildouts slow or federal infrastructure spending gets delayed, the volume and price assumptions could prove optimistic.
Confirmation would come as Nucor reports rising margins and falling capex in the next two to three quarters, alongside sustained domestic steel prices above $800 per ton. A reversal would appear if import share climbs back toward 20% or if new capacity from competitors floods the market.
AlphaScala's proprietary model gives NUE a score of 52 out of 100, a Mixed rating. The next scheduled catalyst is Nucor's second-quarter earnings report, expected in late July. The company's West Virginia mill, part of the $20 billion capital program, is still ramping up and will be a key driver of volume growth.
For more on Nucor's valuation and positioning, see the NUE stock page.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.