Alcoa’s (AA) Q3 Earnings on Deck: Can the Stock Sustain its Rally?

Alcoa Corporation (NYSE: AA) is set to unveil its third-quarter 2025 financial results after the closing bell today, a moment eagerly anticipated by analysts seeking clarity on the aluminum giant's performance amid a complex market landscape. A conference call is scheduled for 5:00 p.m. EDT to further dissect the results.

Analysts expect AA to post an EPS of approximately –$0.05, a sharp drop from the prior year’s $0.57, signalling a sizable reversal into a loss. On the revenue side, expectations are for about $3.13 billion, representing roughly 7.7% year‑over‑year growth. In short: analysts are preparing for a quarter with modest top‑line expansion but a significant earnings contraction, suggesting that margin pressures or other cost headwinds may offset any sales gains.

The stock's year-to-date performance paints a mixed picture, currently down approximately 3.5%, but showcasing a remarkable 50%+ surge over the past six months. This recent rally has the markets wondering if Alcoa can maintain the momentum.

Several factors are expected to influence Alcoa's Q3 performance. The anticipated revenue growth is largely attributed to increased demand for aluminum products in key markets like Europe and North America. Furthermore, the restart of previously idled smelters, such as Alumar and Warrick, are projected to bolster production volumes and contribute to revenue growth.

However, Alcoa is also facing significant headwinds. Elevated energy costs, particularly in Europe, pose a substantial threat to profitability. The company's energy-intensive operations make it particularly vulnerable to fluctuations in energy prices. Additionally, broader inflationary pressures on raw materials and other inputs could further squeeze profit margins.

While the prevailing narrative focuses on increased demand and strategic initiatives, a more cautious perspective suggests that Alcoa's recent rally might be overextended. The 53.08% surge in the past six months could be fueled by speculative trading rather than fundamental improvements in the company's long-term prospects. The wide range of analyst EPS estimates underscores the uncertainty surrounding Alcoa's earnings potential.

Moreover, the global economic outlook remains uncertain, and a potential slowdown could significantly impact aluminum demand. From this perspective, the market may be overly optimistic about Alcoa's near-term prospects, and a correction could be in store if the company fails to deliver a strong earnings report. A failure to deliver could see the stock price quickly revert to the mean, and then some.

In the second quarter of 2025, Alcoa reported a sequential revenue decrease of 10% to $3 billion. The company also completed the sale of its 25.1% stake in Ma'aden Joint Ventures for $1.35 billion, a strategic move aimed at optimizing its portfolio and strengthening its balance sheet. While this sale provides Alcoa with additional capital, it also reduces its exposure to the Ma'aden Joint Ventures' future earnings. This strategic shift reflects Alcoa's focus on streamlining its operations and allocating capital to its core businesses.

As Alcoa prepares to announce its Q3 2025 earnings, the markets are closely scrutinizing the company's ability to navigate a complex market environment. The company faces both tailwinds, such as increased demand and strategic initiatives, and headwinds, such as elevated energy costs and input inflation.