Chinese Lithium Production Halt Means Upside for These 3 Stocks

Key Points

• New data center buildouts and lower Chinese lithium production have sent prices soaring in July 2025, creating upside in these three stocks. 
• The market has rewarded all three with bullish momentum; the question is whether they can keep it going.
• Judging by short interest declines and institutional buying, today's list seems to have a bright future.

Lithium is poised to become a red-hot commodity in the basic materials sector, driven by a couple of key macro tailwinds. First and foremost, the new data center buildout across the United States will require a decent amount of lithium to be used in the supercomputers that will train tomorrow’s leading artificial intelligence models.

Secondly, more than three-quarters of the global lithium production and supply chain originates from China. One of the leading Chinese lithium companies has just announced its plan to lower production volumes until it receives further government approval to resume previous production levels.

As a result, lithium prices shot up by 24.2% in July 2025 alone.

From this price spike alone, it seems that the future profitability levels and expectations for stocks like Albemarle Corp. NYSE: ALB, Sociedad Quimica y Minera de Chile NYSE: SQM, and even Lithium Americas Corp. NYSE: LAC are now headed higher, creating more bullish scenarios for these companies to make into reality for the coming months and quarters, especially when the true numbers come out from this demand cycle.

Albemarle’s Earnings Growth Stands to Push the Stock Higher

They say a good story without numbers is just a fairytale, and that’s what this entire data center and Chinese production theme would be without the underlying earnings growth to support it. That’s exactly what analysts see for Albemarle and just what investors need to start watching out for.

For Albemarle’s upcoming quarterly announcement, Wall Street analysts are now projecting earnings of $2.74 per share (EPS), a dramatic surge compared to the company’s most recent result of just 11 cents per share. While the outlook for future earnings appears remarkably bullish, the current market landscape already gives investors plenty of reason for optimism.

Wall Street was looking for a net loss per share of 83 cents, and Albemarle completely blew those expectations out of the water, a theme that may soon become the norm rather than the exception. With this in mind, it shouldn’t be a surprise for investors to see some institutional buying take place in this financial momentum.

Those from Geode Capital Management boosted their Albemarle holdings by 2% as of early August 2025 to build a position as high as $184.8 million today, or a net 2.5% ownership in the entire company, a vote of high conviction and expectations for the stock’s future bullish scenarios.

Leader in Price Action: Sociedad Quimica y Minera Stock

When it comes to price action, the market seems to have been rewarding Sociedad Quimica y Minera stock the most out of today’s list, and there’s a very good reason for that. After a one-week rally of roughly 27%, this stock now trades at 97% of its 52-week high, providing investors with the bullish momentum signal they have been looking for in terms of confirmation.

This price action is based on Sociedad Quimica y Minera stock operating between the United States and Chile, where the world’s largest lithium mines are located. This exclusive tie to Chile and the United States’ needs for lithium for data center buildouts creates the sort of tailwinds that the market may be attempting to price in right now for the company.

Although there is little evidence of further optimism from institutional investors or Wall Street analysts, likely due to the company's international nature, the near future may bring a change, as the price action and financial developments themselves may lead to a new opinion on the company.

If it serves as any indication, investors can look to the recent 12.2% decline in short interest for this stock, signaling some short sellers may be giving up on the hopes of this company having a near-term top, with more upside to be built into it.

A Moat for Lithium Americas Stock

This company owns 100% of the lithium mining rights within the Thacker Pass in Nevada and other mining rights across Canada. This exposure enables the United States to source lithium more efficiently domestically and without supply chain or logistical issues.

With this setup in mind, it makes sense that the stock joined the lithium rally over the past week with a performance of 18.7%. This gives investors another reason to start looking into this recent behavior and whether Lithium Americas can continue this trend.

Chances are that it will, considering that this recent rally may eventually trigger what’s known as a “short squeeze.” With $68.7 million worth of short positions open, or 13% of the float, there is enough riding in bearish bets to imply additional buying pressure when and if these short sellers are forced to close their positions (which involves buying the stock).