BHP Group Ltd (ASX: BHP) shares have surged 47% over the past 12 months to $61.35, delivering one of the mining giant's strongest years in recent memory. But with FY26 results due Tuesday, investors are about to discover whether the company's earnings can justify the rally.
After such a powerful run, expectations are high. Could BHP shares have even further to climb?
Image source: Getty Images
Copper is driving the share price
The surge of BHP shares has been part of a broader resources boom that delivered the sector its strongest year since 2006.
Copper has done much of the heavy lifting, becoming increasingly central to the BHP investment case.
But the company's latest operational review contained a warning for investors. BHP's total copper production fell 3% to 1,953 kilotonnes in FY26. More importantly, management expects FY27 copper production to fall to between 1,650 and 1,800 kilotonnes.
That's a significant step down, driven largely by an expected decline in grades at Escondida. Adding to the pressure, BHP expects capital expenditure of roughly US$11 billion per year in both FY26 and FY27, which could weigh on near-term free cash flow.
Can BHP keep the rally going?
The bull case for BHP shares increasingly rests on copper and whether investors are willing to look through weaker FY27 production towards the company's longer-term growth pipeline.
Jansen, Resolution Copper and Vicuña are all major long-dated projects, but they won't make meaningful contributions to earnings this year or next.
That leaves investors facing an interesting trade-off. BHP's near-term copper production outlook is weakening, but its longer-term exposure to copper remains potentially attractive as demand for the metal grows across electrification, renewable energy and artificial intelligence infrastructure.
Crucially, BHP's balance sheet gives management the financial flexibility to continue investing while still returning cash to shareholders.
All eyes on FY26 results
The FY26 result itself should be strong, given the commodity price environment during the second half. But for BHP shareholders, the numbers may not be the most important part of Tuesday's announcement.
After a 47% share price rally, the market is likely to focus heavily on what management says about FY27 and beyond. Investors will also be watching for the first major commentary from BHP's new chief executive, who took over on 1 July.
If management can convince investors that temporary copper headwinds won't derail BHP's longer-term growth story, the 47% rally could have further to run.
But with expectations already elevated, anything less than a compelling outlook could put the red-hot BHP share price under pressure.
