This 2026 trade is quietly beating AI stocks: the rally may have further to run

A standout three-month trade comes from an old-school commodity rather than semiconductors, memory chips or the wider AI boom.

Coffee futures have gained about 13% over that period, compared with a 2.2% rise for the VanEck Semiconductor ETF and a 4.1% advance for the S&P 500. The Roundhill Memory ETF has been little changed.

Prices are climbing even as Brazil heads towards what could be a record 2026/27 crop, despite improving long-term supply.

Coffee is beating the AI trade despite a record crop

USDA forecasts Brazil’s 2026/27 coffee production at 71.9 million 60-kilogram bags, which would be a record crop. Ordinarily, that kind of supply outlook would pressure prices.

Instead, Arabica has rebounded roughly 30% since June.

Brazil’s harvest has moved more slowly than a year ago. Cooxupé, the country’s largest coffee cooperative, said members had harvested 74.6% of their crop by August 7, compared with 80.4% at the same point last year.

That slower pace is colliding with tight nearby inventories and uncertainty over export availability.

Jefferies analyst Kaumil Gajrawala highlighted the move this week, noting that Arabica had risen about 30% since June while the earthquake in Colombia introduced another supply concern.

Brazil may eventually deliver volumes, but traders care about whether enough exportable coffee is available in the right place at the right time.

Colombia has added another problem for a tight market

The August 10 earthquake in Colombia has made that near-term question harder.

The 7.4-magnitude quake disrupted a road carrying about 60% of Colombia’s coffee exports and temporarily interrupted operations at Buenaventura, the country’s key Pacific port, according to the Financial Times.

Shipments have been redirected through Caribbean routes while damage is assessed.

Colombia matters because it is the world’s leading producer of high-quality mild-washed Arabica, a key input for global roasters.

That does not mean the world is running out of coffee. The longer-term supply picture is improving, particularly in Brazil.

But futures markets price immediate availability as well as future production. A record crop sitting on farms cannot instantly replace beans delayed by weather, infrastructure damage or transport bottlenecks.

The bearish case is straightforward. If Brazil’s harvest accelerates and Colombian logistics normalise quickly, the scarcity premium could disappear as fast as it arrived.

Wall Street is looking beyond futures for the next winners

The coffee theme is also drawing attention to listed companies, although higher bean prices are not automatically positive for roasters.

HSBC recently upgraded Keurig Dr Pepper to Buy from Hold and raised its price target to $40 from $37.

Analyst Sorabh Daga cited strong refreshment-beverage trends and an improving outlook for the company’s US coffee business in the second half of 2026.

Starbucks is another name attracting attention and its shares are up about 29% this year.

Frank Cappelleri, founder of CappThesis, said the stock is approaching the top of a long-running trading range. He sees a move towards $125 as potentially opening the door to stronger momentum and a challenge to previous highs.

For both companies, elevated raw-coffee costs can still squeeze margins, so the equity story is not simply a bet on higher futures.

Coffee’s outperformance shows how quickly capital can rotate away from crowded themes when a physical commodity develops its own supply catalyst.

The next phase depends on which force wins: temporary shortages and logistics problems, or Brazil’s looming record crop.