Pilbara (PLS) into AI?
I'm looking to sell half of my PLS shares and invest the profit into AI stocks. Any recommendations?
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Answer
Hi Brian,
Pilbara Minerals (PLS) – PLS has surged over +250% from its panic June low and while we still anticipate further strength up towards the $3-3.20 region, MM believes the “easy money” from the bounce is behind us.
Importantly PLS has seen its revenue fall from over $4bn in FY23 to an estimated~$1bn in FY26. due to the collapse in lithium (Li) prices and it’s been unprofitable, having posted losses in FY25. Hence, from an investment perspective, it’s largely a play on lithium prices. The battery material bounced from US$600 and US$1,000 in the 2-months from June, and it’s now consolidating ~$US850.
PLS’ AISC equates to roughly US$370–380 per tonne suggesting that the Li producer is now operating profitably, and if we get a sustained break back above Augusts ~$US1000 high the profit levers will start to work. Taking a definitive view of PLS is challenging with Beijing’s policies driving the Li price swings as opposed to supply & demand but we are bullish at this stage.
AI – the “AI Trade” will come under the microscope over the coming weeks with US big tech reporting – expectations are high and if not met the stocks will be punished. Our top picks in the space were covered in Thursday’s report with our preference remaining for real-asset and infrastructure beneficiaries (GMG, SFR, CCJ), complemented by quality platform exposure (XRO, SNOW, GOOGL and MSFT).
