For years, Albemarle’s investment argument has been almost inextricably linked to electric cars. More electric cars meant more batteries, which meant more lithium, and higher lithium prices may result in much larger profits for the major chemical manufacturer and lithium producer. When lithium prices plummeted, that connection also brutally reversed. Wall Street now believes that another source of demand is growing to the point where it may alter the situation. Mizuho upgraded Albemarle (ALB) to Outperform from Neutral and maintained a $130 price target, according to Investing.com. The firm pointed to stronger demand from battery energy stationary storage, or BESS, as a reason the lithium market could become tighter than previously expected. Mizuho’s updated forecast raised its 2027 lithium demand estimate by almost 10%, while its supply and inventory depletion projections were mostly the same, Investing.com reported. This figure is significant, since cars do not use these batteries. Instead, the batteries store energy until it’s required by sitting next to power grids, renewable energy initiatives, and other significant electrical systems. This development provides Albemarle investors with a second significant source of lithium demand at a time when concerns about the rise of electric vehicles have made the previous investment thesis less reliable. Additionally, official data indicates that the storage sector is rapidly growing. Battery storage changes Albemarle’s lithium equation The U.S. Energy Information Administration reports that over the last three years, utility-scale battery storage capacity in the country has increased at an average annual rate of 70%. The U.S. had 43.6 gigawatts of operating battery-storage capacity at the end of 2025. Operators added another 8.3 gigawatts during the first six months of 2026, pushing capacity to nearly 52 gigawatts. They reported plans to add another 54 gigawatts through 2028. In 2025, the International Energy Agency named battery storage the fastest-growing power technology. Over the course of the year, 108 gigawatts of storage capacity were added globally, a 40% increase from 2024, and the total installed capacity increased to 11 times its 2021 level. Utility-scale capacity accounted for nearly 80% of the increase. That growth may explain Mizuho’s shift in perspective. Related: Daily market wrap: top stocks – Qualcomm, Keurig Dr Pepper, and Albemarle Benchmark Mineral Intelligence increased its 2027 lithium carbonate forecast to $22,500 per metric ton from $18,375 and raised its 2028 estimate to $19,500 from $14,500. Mizuho subsequently raised its assumptions for prices realized by Albemarle’s Energy Storage business. The analyst firm now expects the segment to realize about $21,000 per metric ton in 2027, up from its previous estimate of $17,000, according to Investing.com. Mizuho also increased its estimate for Albemarle’s 2027 adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, to $3.2 billion from $2.4 billion. What stands out in those numbers is that Albemarle does not necessarily need lithium demand to explode. It needs demand to grow enough relative to supply to support better pricing. Albemarle’s own results show why that difference matters. Albemarle’s results show what higher lithium prices can do In its Aug. 5 earnings report, Albemarle said second-quarter Energy Storage sales reached $1.28 billion, up 78% from $718 million a year earlier. Volume wasn’t the main motivator. Sales volume reached 65 kilotons of lithium carbonate equivalent, a common metric for comparing various lithium products, representing an 11% rise. More natural resources: Top bank revises 2026 gold price forecast as investors reassess rally Chevron’s Bakken decision fixes a $3.7 billion debt problem JPMorgan strongly recommends buying tumbling energy leader Albemarle’s average realized lithium price, however, jumped 61% to $19.53 per kilogram from $12.17 a year earlier. Energy Storage adjusted EBITDA climbed 229% to $723 million. That is the part of Albemarle’s story investors should not overlook. A relatively modest increase in the amount of lithium sold accompanied a much larger increase in earnings as pricing improved. Albemarle made that sensitivity even clearer in the outlook scenarios it published with its second-quarter results. Using a lithium market price of roughly $10 per kilogram of lithium carbonate equivalent, the company estimated 2026 sales of $4.1 billion to $4.3 billion and adjusted EBITDA of $900 million to $1 billion. At roughly $20 per kilogram, the sales range rises to $5.7 billion to $6 billion, while adjusted EBITDA jumps to between $2.4 billion and $2.6 billion. Those are scenarios rather than predictions. Albemarle said the ranges illustrate potential outcomes at recently observed lithium-price levels. Still, they demonstrate why a change in the expected supply-demand balance can have such an outsized effect on the company. Albemarle generated $1.74 billion in total second-quarter sales, up 31% from a year earlier, while adjusted EBITDA increased 155% to $858 million. The company said higher Energy Storage pricing was a primary reason for the improvement. Albemarle’s next lithium catalyst is not coming from EVs. Bloomberg / Getty Images Albemarle no longer needs EVs to carry the whole story None of this implies that electric cars are unimportant to lithium. They remain a significant source of battery demand, and Albemarle itself continues to view energy storage and electric cars as key markets. CEO Kent Masters said in the company’s second-quarter report that Albemarle continued to see resilient demand across energy storage, electric vehicles, and semiconductors. The investment argument is becoming less reliant on one of those markets, which makes a difference. Even if storage batteries never drive a car a mile, they may still absorb lithium. As electric systems include renewable power and need batteries to store electricity when supply surpasses current demand, this scenario creates an additional opportunity for the commodity to develop. The Energy Information Administration expects that buildout to continue. U.S. operators have reported plans for another 14 gigawatts of battery-storage capacity during the second half of 2026, followed by 26 gigawatts in 2027 and 14 gigawatts in 2028. The traditional bull thesis was that the adoption of electric vehicles will increase fast enough to offset the increasing output of lithium. Albemarle has another option, thanks to the more recent argument. As electric cars continue to grow, stationary batteries will also become a much bigger consumer of lithium. A significant danger still exists. Lithium is still a commodity, and manufacturers may increase supply in response to price increases. A market that seems to be tight may soon revert to surplus. However, Mizuho’s increase emphasizes what Albemarle’s most recent data already shows: Rising lithium prices may significantly impact profitability. Investors now have a fresh reason to believe that the road may not be the only source of the next increase in lithium demand, thanks to battery storage. Related: J.P. Morgan revamps Lithium Americas stock price target
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