Silver prices have soared over the last year, and investors have taken notice. Since the start of 2025, the iShares Silver Trust (SLV +3.95%), which tracks the spot price of silver, has blasted 280% higher.
This bodes well for silver miners like First Majestic (AG +1.98%), which has soared by 364% over that same period. As silver climbs higher, is First Majestic stock a smart buy in 2026? Let's explore the opportunity and risk to find out.
NYSE: AG
Key Data Points
Silver is an essential metal that is difficult to replace
Silver plays a crucial role in artificial intelligence (AI) technology, thanks to its electrical conductivity. This makes it a key component for enabling high-speed data transmission in semiconductors and for cooling power-hungry GPUs. Beyond AI, silver is important for solar panels (photovoltaics), electric vehicles, and medical imaging equipment.
First Majestic has noted that industrial silver demand has risen 33% since 2020. The company forecasts double-digit demand growth due to the metal's use in chips, servers, switches, and robotics. The company also notes a silver deficit, with annual silver consumption of approximately 1,150 million ounces and annual mine production of approximately 835 million ounces. 2025 marks the fifth consecutive year of an annual shortfall in the metal.
First Majestic is a pure-play silver and gold stock
First Majestic is one of the more pure-play silver mining and processing stocks for investors seeking exposure to silver. Through three quarters of last year, 57% of its revenue came from silver. Including gold, precious metals accounted for 90% of its revenue.
Image source: Getty Images.
The company acquired a 70% stake in the Cerra Los Gatos Mine following its acquisition of Gatos Silver last year. The property covers 103,000 hectares with numerous unexplored mineralized zones. It adds substantial production volume, contributing 2.1 million silver equivalent (AgEq) ounces in the third quarter alone, with a reserve life extending to 2032.
A major risk of investing in First Majestic Silver or any silver miner is that profits depend heavily on silver prices, which can swing widely and could crush earnings if prices plummet. With that said, in Q3, the company reported mine operating earnings of $99 million thanks to higher silver production from its acquired mine, along with a 31% increase in the average realized silver price. As of Sept. 30, 2025, a 10% change in the silver price would affect net earnings by approximately $7 million, based on metals held in inventory and trade receivables subject to provisional pricing.
First Majestic is a levered play on rising silver prices
As spot silver prices rise, First Majestic should get a healthy boost to its earnings and margins. Analysts project that earnings will grow 52% in 2026 and 47% in 2027. One thing to keep in mind is that silver miners face operational risk from rising production costs, as well as geopolitical risks from disputes with local jurisdictions. With that said, for investors bullish on silver, First Majestic can be one way to capitalize on this upside.
