SQM Is Riding the Lithium Recovery Wave Back to $100+

Signal: BUY | Score: 65.01/100

The lithium market is finally turning, and SQM just delivered the earnings comeback story of 2025. After swinging from a $404M loss to $588M profit, this Chilean lithium giant is positioned perfectly for the next EV battery boom.

The Setup

SQM is breaking out near its 52-week high of $95.46, with momentum firmly on its side (momentum score: 77/100). The stock has rocketed from its $29.36 low last year, and the RSI at 60.8 shows there's still room to run before hitting overbought territory. We're seeing classic trend continuation here, with strong volume supporting the move higher.

The technical picture gets even better when you consider the forward P/E of just 16.6x, a massive discount to the trailing P/E of 45x. That's screaming earnings acceleration.

The Catalyst

SQM's Q4 2025 earnings were nothing short of spectacular. Revenue jumped 23.3% year-over-year to $1.32 billion, while gross profit surged 52.7% to $448.5 million. The company delivered record lithium sales volumes just as prices started recovering from their 2024 lows.

Here's the kicker: management is forecasting 25% global lithium demand growth in 2026. That's not just recovery, that's explosive expansion. With EPS expected to grow 15% from $6.74 to $7.77 this year, and a PEG ratio of just 0.57, SQM is trading at a discount to its growth rate.

The next earnings report drops May 26th, just three weeks away. If lithium demand continues this trajectory, we could see another blowout quarter.

Bull Case

• Lithium supercycle 2.0: 25% demand growth in 2026 could send lithium prices soaring again, directly benefiting SQM's margins • Diversification play: Strong iodine pricing provides stability beyond just lithium exposure • Valuation gap: Forward P/E of 16.6x is cheap for a company growing earnings 53% year-over-year

Bear Case

• Cyclical risks: Lithium is notoriously volatile, and we've seen this boom-bust cycle before • High debt load: 59% debt-to-equity could pressure margins if commodity prices reverse

The Trade

Entry: $92.95 (current price)
Target: $110 (15% upside based on sector recovery)
Stop Loss: $82 (below key support)
Risk/Reward: 1:1.5
Timeframe: 3-6 months

*This is one person's analysis, not financial advice. Always do your own research.*