Why Cleveland-Cliffs' Stock Is Surging as AI Demands Steel

The steel industry isn't the first place you'd expect to find a stock powered by AI, but here's the twist: Cleveland-Cliffs (CLF) isn't just making steel—it's positioning itself to supply the very infrastructure that fuels the AI revolution. And that's sending its stock soaring. Let me break down why this rust-belt stalwart is now a tech-driven growth story.

The AI-Steel Nexus You're Missing
AI isn't just about algorithms—it's a hungry beast that needs power. Data centers, server farms, and the transformers that keep them running are all built with electrical steel, a specialty metal Cleveland-Cliffs produces. As AI adoption skyrockets, so does demand for this critical material. The company's CEO, Lourenco Goncalves, recently revealed that AI-driven electricity consumption is creating a “shortfall in transformer capacity,” which CLF is rushing to fill.

In 2025, the company announced plans to repurpose a West Virginia plant into a $150M electrical distribution transformer factory—set to boost production of grain-oriented electrical steel by 30-40%. This isn't just a bet on AI; it's a direct play on the $100 billion AI infrastructure buildout underway globally.

Note the dip in early 2025—this is your buying opportunity.

The Efficiency Play That's Under the Radar
While Wall Street focuses on CLF's Q1 2025 losses ($483M net loss), the real story is its ruthless restructuring. By idling six underperforming facilities, slashing 1,200 jobs, and exiting unprofitable markets like rail and specialty steel, CLF is trimming fat to feed its AI future. These moves are projected to save $300M annually—cash that can now fund its electrical steel expansion.

The numbers? By 2026, CLF expects to add $500M annually to EBITDA once its new transformer plant comes online. Analysts at B. Riley now see a $24.93 price target by 2026—a 320% jump from its May 2025 lows.

Why Now Is the Time to Buy
The market is missing two critical factors:
1. AI's Insatiable Appetite for Steel: Every new data center, every cloud server upgrade, and every autonomous vehicle requires components made with electrical steel. CLF's strategic shift ensures it's not just a commodity supplier—it's a strategic partner to the AI era.
2. Undervalued on Turnaround Metrics: At its May 2025 price of $5.81, CLF trades at just 3x its 2026 EBITDA estimates. That's a steal for a company with a $7B debt reduction plan and $3B in liquidity to fund its growth.

Action Plan: Buy Now—Set Sights on 2026
This isn't a “hold” or “wait”—this is a rare value play in an otherwise overheated market. Here's how to play it:
- Buy CLF at $6-$7 and set a $15 price target by year-end . The stock is priced for failure but built for AI-driven success.
- Watch for catalysts: The transformer plant's Q4 2025 startup, positive EBITDA trends in 2026, and partnerships with tech giants like NVIDIA or AWS.

Backtest the performance of Cleveland-Cliffs (CLF) when its quarterly earnings exceed analyst expectations, buying on the announcement date and holding for 60 trading days, from 2020 to 2025.

Cramer's endorsement aside, history shows this stock has underdelivered after positive earnings surprises. Investors should temper enthusiasm with caution—CLF's turnaround is still unproven in real-world results.

Note how CLF's 1.06 ratio is shrinking as it sheds non-core debt—this is a company getting lean for growth.

Final Verdict:
CLF is a once-in-a-decade opportunity to profit from the AI revolution through an old-school industry. The restructuring is painful now, but the payoff—powered by AI's endless hunger for steel—is coming fast. Don't miss the train. Buy now.