Alcoa (ASX:AAI) Doubles From 52-Week Low: Buy the Breakout or Take Profits?

Alcoa’s (ASX: AAI) share price has almost doubled from its 52-week low of A$36.20 and is now trading around A$58. The stock hit a high of A$73.21 earlier this year before pulling back, but the business keeps getting stronger. Record smelter production, aluminium prices at their highest level in three years, and a major gallium project in Western Australia are all supporting the share price. We believe this recent dip could be a good buying opportunity for investors who missed the earlier rally.

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Record Production Powers the Rally

Alcoa is operating at full strength. In Q3 2025, the company achieved record production at five aluminium smelters in Canada, Norway, Australia, and the US. When aluminium prices are high, strong production is exactly what investors want to see, and Alcoa is delivering.

At first glance, Alcoa’s Q3 numbers look strong, with profits rising compared to the previous quarter. But most of that boost came from a one‑time gain on selling its Ma’aden stake. Without that, the company actually slipped into a small adjusted loss. The underlying business is getting stronger, but the headline profit number doesn’t tell the full story.

The key driver here is aluminium prices. Aluminium on the London Metal Exchange recently reached US$2,880 per tonne, the highest level in three years, and prices are up 14% so far this year. China is close to its production limit of 45 million tonnes, and delays at new smelters in Indonesia are tightening supply. Because of this, prices could rise to around US$3,000 per tonne in early 2026. If that happens, Alcoa’s profits could increase significantly.

Alcoa’s Gallium Project Could Be the Next Big Winner

Alcoa is also betting big on critical minerals. Its Wagerup gallium project in Western Australia could produce 100 tonnes of gallium per year, about 10% of the global supply. Gallium is essential for semiconductors and defence technology, and China controls most of the world’s production.

The Australian government has put A$307 million behind this project. The US, Japan, and the Japanese trading house Sojitz are also investing. Prime Minister Albanese visited the site and called it “game-changing”. Because the project uses Alcoa’s existing refinery, costs are 60-70% lower than building from scratch.
Management expects first metal by 2026. We think this optionality isn’t fully priced into the stock. If gallium takes off, it gives Alcoa a valuable new revenue stream beyond aluminium.

The Investor’s Takeaway for Alcoa

At current levels, Alcoa looks reasonably priced for a company producing at record levels and benefiting from higher aluminium prices. Analyst expectations suggest some near-term upside, but the bigger potential lies in further gains in aluminium prices and progress on its gallium project.

That said, there are risks. The closure of the Kwinana refinery has been costly and may lead to more expenses. Alumina prices can move sharply, and US tariffs on Canadian aluminium continue to be a challenge.

Our view: Alcoa looks attractive for investors who are comfortable with the ups and downs of commodity stocks. The pullback from recent highs offers a better entry point than buying at the top. Investors focused on growth may see value in buying at current prices, while more cautious investors might prefer to wait for a slightly lower entry. Overall, we remain positive on Alcoa heading into 2026.