Rio Tinto's 43% Earnings Surge: AI Metals Demand or Mirage?

Rio Tinto plc (NYSE: RIO) reported a 43% jump in underlying earnings to $6.9 billion for the first half of 2026, powered by strong prices for copper, aluminum, and lithium, which together contributed 57% of the company's EBITDA. The results, released on July 29, also showed a 75% rise in free cash flow to $3.8 billion, helped by a $3.6 billion benefit from stronger commodity prices and an $870 million contribution from the miner's efficiency program. The company increased its interim dividend by 43% to $3.4 billion.

The earnings surge comes as hyperscalers pour money into AI data centers and power capacity. U.S. data-center power demand is forecast to rise from 31 GW in 2025 to 66 GW by 2027, and data center electricity consumption could quadruple by 2035, according to Goldman Sachs, which projects hyperscaler spending on AI infrastructure will hit $765 billion in 2026 and top $1 trillion in 2027.

The buildout is feeding demand for industrial metals. Copper is being used to expand power grids, aluminum is finding its way into server racks and power infrastructure, steel is going into data center buildings and transmission towers, and lithium is used in battery storage systems. The IEA expects copper and lithium supply deficits to persist through 2035. For Rio Tinto, the AI buildout adds a demand source beyond traditional construction markets.

Rio Tinto also compares favorably with rival BHP Group Ltd (NYSE: BHP). Rio's stock trades at a forward price-to-earnings ratio of 11.57x, versus BHP's 16.56x, and offers a dividend yield of 4.85% against BHP's 3.04%. Both miners generate strong cash flow, and hedge fund holders in Rio increased to 40 in Q1 from 38 the prior quarter, while BHP's rose to 31 from 29. Renaissance Technologies increased its Rio stake by 418%, Bridgewater Associates by 1,108%, and Quantinno Capital by 33%. Short interest is thin: Rio's ratio stood at 0.74% as of July 15, down from 0.82 at the end of June, while BHP's slipped to 0.62% from 0.71%.

The risks are commodity-price volatility, execution challenges at major projects, and China's softer steel demand. Rio's iron ore operation has remained resilient, and its efficiency program is supporting margin expansion, but the same factors that drove the earnings surge could reverse if metal prices cool.

For more on how BHP and Rio compare as investment bets, see BHP and Mineral Resources: Two ASX Mining Stocks, Two Different Bets. For a broader view of the metals demand picture, the commodities analysis page tracks the key drivers.

Rio Tinto's next scheduled catalyst is the full-year 2026 results, due in February 2027.