Rio Tinto plc (NYSE:RIO) released its 2026 half-year results on July 29. Its underlying earnings rose 43% to $6.9 billion, supported by strong metal prices. Copper, aluminum, and lithium businesses contributed 57% of the company’s EBITDA. <\/p>\n In addition to the favorable commodity market conditions, Rio Tinto also reaped benefits from its operational efficiency program built around cost-cutting and divestments. This program launched last year and delivered $870 million in savings during the first half. <\/p>\n That, combined with the $3.6 billion benefit from stronger commodity prices, helped push Rio Tinto’s free cash flow through the roof. The miner’s free cash flow increased 75% to $3.8 billion. This led the company to increase its interim dividend 43% to $3.4 billion. <\/p>\n For Rio Tinto, the AI infrastructure buildout could offer an additional source of demand for its products beyond the traditional construction markets. <\/p>\n A lot of copper is being used to expand power grids, and aluminum is seeing more use in power infrastructure and data center components such as server racks. More steel is going into data center buildings and transmission towers, while lithium is used in battery energy storage systems. <\/p>\n How Rio Tinto Compares With BHP <\/p>\n Both Rio Tinto plc (NYSE:RIO) and BHP Group Ltd (NYSE:BHP<\/a>) are well positioned to benefit from AI-fueled demand for copper and other metals. But Rio Tinto compares favorably with rival BHP Group on several metrics. Rio Tinto stock currently offers a discounted valuation at a forward PE ratio of 11.57x, compared to BHP’s 16.56x. Rio also offers a higher dividend yield of 4.85% against BHP’s 3.04%. <\/p>\n However, both companies generate strong cash flow. Rio’s latest results showed strong momentum in free cash flow during the first half of 2026. <\/p>\n Hedge Funds Continue Adding Exposure to Rio Tinto <\/p>\n Hedge fund investors are showing confidence in Rio Tinto’s stock. Hedge fund holders in the stock increased to 40 in Q1 from 38 the prior quarter. BHP Group Ltd (NYSE:BHP)’s hedge ownership also modestly increased in the same period but remained lower at 31 from 29. <\/p>\n Several hedge funds increased their stakes in Rio Tinto. Renaissance Technologies increased its position by 418%, Quantinno Capital raised it by 33%, and Bridgewater Associates boosted it by 1,108%. <\/p>\n Bearish sentiment is limited across Rio Tinto and BHP Group. Rio’s short interest ratio stood at 0.74% as of July 15, down from 0.82 at the end of June. BHP Group Ltd (NYSE:BHP)’s short interest also edged lower in the same period to 0.62% from 0.71%. <\/p>\n Is Rio Tinto Becoming an AI Infrastructure Winner? <\/p>\n The rapidly rising AI infrastructure capex is creating a new source of long-term demand for industrial metals. Rio is well-positioned to benefit from this demand as its exposure to copper, aluminum, and lithium grows and the iron ore operation remains resilient. Additionally, the company’s efficiency program is contributing to margin expansion and supporting stronger free cash flow. <\/p>\n However, commodity-price volatility, execution challenges at major projects, and China’s softer steel demand are some of the issues that could affect Rio adversely. <\/p>\n That said, Rio’s strong free cash flow generation, solid dividend yield, and hedge fund interest strengthen its long-term investment case. <\/p>\n While we acknowledge the potential of RIO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the <\/a>best short-term AI stock<\/a>. <\/p>\n READ NEXT: Should You Buy Lockheed Martin After Its Strong Q2 Earnings Rally?<\/a>\u00a0and AI-Fueled Demand Signals a Bigger Opportunity for Bloom Energy (BE) Investors<\/a>.\u00a0 <\/p>\n<\/a> Rio Tinto (RIO)\u2019s 43% Earnings Surge: Sustainable Growth or Commodity Mirage? Rio Tinto Delivers Stronger Earnings as Productivity Gains Take Hold <\/p>\n