One sector on the ASX delivered a result in FY26 that left every other sector in its wake.
Strong commodities growth contributed to the S&P/ASX 200 Materials Index (ASX: XMJ) rising 47% in FY26.
This led to the materials sector outperforming the broader S&P/ASX 200 Index (ASX: XJO) (including dividends) by a staggering 7 to 1.
Gold miners, copper producers, and lithium names all contributed to a sector-wide run that rewarded investors who stayed patient through a difficult FY25.
The question now is whether the conditions that drove that performance will remain in place heading into FY27.
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Why the ASX materials sector outperformed so heavily
Three forces combined to drive the sector's extraordinary FY26 performance.
First, gold surged above US$5,400 an ounce at its peak. This delivered extraordinary returns to ASX gold miners that dominate the materials sector's top performers list.
Second, copper hit record highs above US$13,000 per tonne as AI data centre construction, electric vehicle adoption, and grid infrastructure investment drove a demand surge.
Third, lithium prices recovered strongly after a brutal two-year downturn, with spodumene prices rising approximately 196% over the twelve months to May 2026. This lifted ASX lithium producers from the bottom of performance tables to some of the strongest performers on the ASX.
All three of those tailwinds are still present to varying degrees as FY27 begins. But the easy gains from the initial recovery move are mostly behind investors now.
Let's take a look at some ASX materials stocks that have benefited from these tailwinds.
BHP Group Ltd (ASX: BHP): Copper was a standout, but the Jansen setback is a reminder
BHP had one of the most remarkable FY26s in its long history.
For the first time in 136 years, copper earnings exceeded iron ore contributions in the first half of FY26. This came as the copper price surge translated directly into record revenue for BHP's Chilean and South Australian copper operations.
BHP shares hit an all-time high of $59.78 in May before pulling back amid concerns about Simandou iron ore supply and a Jansen potash cost blowout.
Yet the long-term copper thesis remains intact.
BHP plans to grow copper-equivalent production at 3% to 4% per year through to 2035, adding to what is already one of the world's most valuable copper portfolios.
However, the Jansen impairment of approximately US$2.3 billion is a setback. Heading into FY27, investors should weigh that capital discipline concern against the undeniably strong commodity exposure BHP brings.
PLS Group Ltd (ASX: PLS): The lithium recovery still has room to run
PLS Group, formerly Pilbara Minerals, was one of the standout performers of the FY26 materials recovery.
Shares surged strongly through FY26, with the company delivering a 241% EBITDA surge in its first-half FY26 result. This came as the broader lithium price recovery flowed directly through to the bottom line.
The lithium price story for FY27 depends heavily on whether EV demand continues to grow at the pace needed to absorb new supply from African and South American deposits.
Most lithium analysts remain positive on the medium-term price trajectory. But the near-term uncertainty is higher than it was in FY26 when the recovery was more linear.
PLS remains the largest and most liquid pure-play lithium exposure on the ASX. This makes the company the default choice for investors who want direct lithium price sensitivity in FY27 without the stock-specific risks of smaller producers.
Liontown Resources Ltd (ASX: LTR): A higher-risk bet on lithium prices and operational ramp-up
Liontown Resources offers a different and higher-risk version of the same lithium theme.
Unlike PLS, which is an established producer with a long operational history, Liontown is still in the early stages of ramping up its Kathleen Valley lithium mine in Western Australia following first production in mid-2024.
That ramp-up risk means Liontown's performance in FY27 will depend not just on the lithium price, but on whether the company can hit its own production targets.
Liontown shares gained 197% in 2025 and continued to deliver for investors who held through FY26 as lithium prices recovered. But the operational risk at Kathleen Valley should not be ignored by investors considering a position.
The bull case is straightforward: if lithium prices hold above US$1,000 per tonne and Kathleen Valley continues to ramp toward its nameplate capacity, Liontown becomes a materially more profitable business in FY27 than it was in any prior year.
Can the materials sector repeat FY26 in FY27?
The most honest answer is: potentially.
The commodity tailwinds that drove the sector's 47% return are still present, but the easy gains from the initial recovery move are already reflected in current prices.
Gold has pulled back from its highs as rate-hike expectations firmed.
Copper has found resistance above US$13,000 per tonne as Chinese demand data has been mixed.
Lithium prices have stabilised but not yet surged to a new leg higher.
For long-term investors, the materials sector still offers compelling structural exposure to AI infrastructure, electrification, and green energy demand that is likely to persist well beyond any single financial year.
For investors expecting another 47% year in FY27, the bar is considerably higher than it was at the start of FY26.
Foolish Takeaway for ASX materials shares
The ASX 200 materials sector's 47% return in FY26 was extraordinary.
BHP brings the most diversified commodity exposure and the strongest balance sheet of the three, but the Jansen impairment is a watch point.
PLS is the cleanest pure-play on lithium prices with the least stock-specific risk.
Liontown offers more upside if both the lithium price and the Kathleen Valley ramp-up deliver, but carries meaningfully more risk than either of the other two.
Whether the ASX 200 materials sector's performance can be repeated in FY27 is another question. Investors should keep an eye on whether the tailwinds that drove FY26 can continue delivering in FY27.
