The thesis

Ero Copper is a base metals mining company with a gross margin of 4266.0% and a net margin of 3155.0%. The company's revenue growth is -2016.0% year over year, indicating significant volatility. With a conviction score of 32 out of 100, the company's prospects are uncertain, yet the analyst consensus rating is hold. The AI buildout is a key driver of the company's potential

Why now

The recent partnership between Apple and Intel to build chips in the United States, combined with Taiwan Semiconductor's latest move, suggests that the AI buildout is gaining momentum. This trend is expected to drive demand for base metals, making Ero Copper's position interesting

What to watch

The company's revenue growth and margins will be key indicators to watch over the next quarter, as they will confirm or deny the thesis. Specifically, a revenue growth rate above -10% and a gross margin above 4000% would suggest that the company is benefiting from the AI buildout

Key risks

The company's valuation risk is high, given its negative DCF intrinsic value of $34. Execution risk is also a concern, as the company's revenue growth is highly volatile. Additionally, the macro risk of a slowdown in AI adoption could negatively impact the company's prospects