Shares in BHP Group Ltd (ASX: BHP) have been trading strongly recently, aided in part by a surging copper price.
The shares are up strongly from 12-month lows of $35.52, to be changing hands for $60.38 on Friday.
The question is have they topped out, or is there more share price strength to come?
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BHP in the box seat
The analyst team at Morgan Stanley has published a new research note this week, suggesting BHP is well-placed to benefit from what they say is a structural uplift in copper demand, while the company's iron ore operations are also performing well.
Morgan Stanley has a bullish share price target on BHP shares, which we'll get to shortly. Firstly, let's look at why they like the company.
One reason BHP is in favour is surging copper demand, which it has specifically targeted as a growth driver over the past decade or so.
A lot of this demand has been coming from the so-called green transition, but Morgan Stanley said a new factor is the boom in data centre construction.
As they say:
Copper is the main materials beneficiary of data centre growth. Power distribution equipment accounts for the bulk of copper use in data centres, with industry estimates suggesting that around 75% of copper demand in data centres is tied to power infrastructure (cables, busbars, connectors, and grounding). Against a backdrop of already constrained supply, rising AI and data centre build‑out adds another layer of support to an otherwise tight copper market.
Morgan Stanley said it estimates copper demand from data centre construction will rise to about 760,000 tonnes in 2026, growing to 1.1 million tonnes by 2027.
They added:
On a growth basis, data centres are already material: the ~250kt year on year increase in 2026 alone would contribute roughly 26% to total copper demand growth. In a higher‑case scenario, data centre copper demand could reach ~4.9% of global demand by 2027, comparable with EVs at ~5.1%.
Morgan Stanley notes that disruptions to copper supply this year have pushed prices higher.
The analyst team also said BHP's expansion plans at Copper South Australia were positive.
They said:
We see Copper SA as a clear medium-term source of upside in BHP's copper portfolio. The smelter and refinery expansion (SRE) reconfigures Olympic Dam's smelting and refining system to support a province-scale model, allowing Olympic Dam to process its own expanded concentrate production, import and blend feed from Prominent Hill and Carrapateena, and potentially process future Oak Dam or third-party concentrate. The SRE supports a path from ~320ktpa Cu today to >500ktpa in Phase 1 and ~650ktpa longer term, while improving the quality of that growth through feed blending, better furnace stability, higher acid capture, expanded refining capacity and precious metals recovery.
Shares looking like a good buy
Morgan Stanley has a price target of $67.50 on BHP shares. The company also pays a dividend yield of 3.15%.
BHP is valued at $315.4 billion.
