Why Sigma Lithium Stock Exploded Higher Today

Brazil-based lithium producer Sigma Lithium (NASDAQ: SGML) stock soared 32.5% through 1 p.m. ET Monday on positive news from China.

And why? As Reuters reports, Ganfeng Lithium Group chairman Li Liangbin believes global lithium demand will grow 30% to 40% in in 2026.

Image source: Getty Images.

More demand, higher prices, more profit

Lithium carbonate contracts on China's Guangzhou Futures Exchange surged 9% in response to Chairman Li's comments, closing at 95,200 yuan ($13,401.28) per metric ton Monday. This is the highest price per ton this battery component has fetched since June 2024.

And this news could get even better for lithium stocks. Mining.com reports that Chairman Li says lithium prices could rise as high as 150,000 yuan, or even 200,000 yuan, per ton in 2026. Thus, a 30% to 40% rise in demand could yield a 58% to 110% surge in lithium prices.

Assuming costs don't rise too much to accommodate added production, the increase in profits for lithium stocks could be even greater.

Is Sigma Lithium stock a buy?

In the case of Sigma Lithium, this could potentially be enough to turn the money-losing stock into a profitable one.

Sigma has lost money every year it has been in business, but according to analysts polled by S&P Global Market Intelligence, the company's in the middle of a turnaround and could report at least a non-GAAP full-year profit as early as 2025. Profitability is already expected to increase in 2026, and if Chairman Li is right and lithium prices surge as well, this could turbocharge Sigma's profits next year.

It might even be enough to produce an honest-to-goodness GAAP profit -- and depending on how large that profit is, it might even be enough to make Sigma Lithium stock a buy.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.