We recently published a list of 7 Undervalued Lithium Stocks to Invest In. In this article, we are going to take a look at where Exxon Mobil Corporation (NYSE:XOM) stands against other undervalued lithium stocks to invest in.

Lithium is a lightweight and highly reactive metal that has become essential to modern energy storage solutions over time. It is commonly used in the form of lithium carbonate, a key component of lithium-ion batteries, which are essential for electric vehicles (EVs) and large-scale renewable energy storage. Recent innovations and cost efficiencies have enhanced EV technology, resulting in a steep increase in lithium demand. According to The Business Research Company, the global lithium market is projected to grow to $9.01 billion in 2025, up from $7.75 billion in 2024, at a compound annual growth rate (CAGR) of 16.3%. However, recent U.S. trade policies on Chinese battery components may disrupt this progress, increasing costs across the energy storage industry.

The swift advancement of clean energy technologies has been a major factor in driving the decline in battery prices. According to the World Economic Forum, lithium-ion battery prices have decreased by over 90% in the past decade, with a 40% drop witnessed in 2024 alone. Chinese manufacturers have been at the forefront of the transition to lithium-iron-phosphate (LFP) batteries, accounting for nearly half of the global EV market. These batteries are 30% cheaper than lithium nickel cobalt manganese oxide (NMC) alternatives while maintaining competitive performance.

However, despite these advancements, the lithium market is now facing policy-driven cost constraints. Moreover, U.S. President Trump increased tariffs on China by 10% in March 2025, bringing the total increase to 20% since his new term began. These decisions are in line with the Biden administration’s decision to increase tariffs on Chinese lithium batteries from 7.5% to 25%, starting January 2026. The U.S. Department of Commerce is expected to impose antidumping and countervailing duties on Chinese battery materials, with industry estimates indicating rates of approximately 150%.

These changes have created uncertainty in the energy storage industry. As per Wood Mackenzie, the U.S. energy storage installations will grow 10% annually between 2025 and 2028, which is a significant decrease from the 25% growth in 2024. A mix of tariffs and supply chain restrictions is forecast to dampen development across the sector.

In 2024, global lithium production peaked at 240,000 metric tons due to increasing demand for battery materials. These batteries, primarily for EVs, accounted for 87% of total lithium consumption in 2023, reflecting the highest reliance on lithium by the automotive sector. As EV adoption surges, this trend is anticipated to continue. According to S&P Global Mobility, global battery electric vehicle sales are expected to touch the 15.1 million units mark in 2025. This marks a 30% increase from sales figures in 2024. EVs are expected to make up 16.7% of total global light vehicle sales, reflecting the sector’s important role in sustaining lithium demand.

Looking forward, the performance of the lithium market will be driven by supply-demand dynamics and the effect of trade policies on pricing. As technological advancements are made and AI-driven optimizations continue to reduce costs, increasing tariffs and shifting supply chains could cause instability. As the sector evolves, lithium remains at the center of the global energy transition, despite the risk of market changes due to tariff-related cost pressures.

Our Methodology

To compile our list of 7 Undervalued Lithium Stocks to Invest In, we used a Finviz screener to come up with the largest lithium companies. We first shortlisted over 30 lithium stocks and then focused on the stocks trading under 15 times their forward earnings. Next, we looked at the top 7 stocks most favored by institutional investors and ranked Undervalued Lithium Stocks in ascending order based on the number of hedge funds invested in them as of Q4 2024. For hedge fund data, we used Insider Monkey’s database of over 1,000 elite hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Exxon Mobil Corporation (NYSE:XOM) 

Number of Hedge Fund Holders: 104

Forward Price to Earnings (P/E) Ratio: 14.03

Exxon Mobil Corporation (NYSE:XOM) is a leading global energy company that operates across refining, exploration, and emerging low-carbon technologies. The company is continuously developing decarbonized power solutions for data centers, with its first site projected to be operational by 2028. Exxon Mobil considers its CCS storage network, integrated carbon capture, and transport a key competitive advantage in industrial decarbonization.

Exxon Mobil Corporation (NYSE:XOM) achieved its third-strongest performance in a decade by reporting $34 billion in earnings for 2024, despite challenging market conditions. The company generated $55 billion in operational cash flow, fueled by strong results from both the Upstream and Product Solutions segments. For the fourth quarter ended December 31, 2024, Exxon reported earnings per share of $1.67, slightly below the expected $1.77.

Furthermore, Exxon Mobil Corporation (NYSE:XOM) achieved record production levels in both the Permian Basin and Guyana operations. Permian production is forecasted to grow significantly from 1.5 million barrels per day in 2024 to 2.3 million by 2030. The company is also making progress with four CCS projects scheduled to begin operations within the next 2 years. In addition, Exxon Mobil Corporation (NYSE:XOM) anticipates that its low-carbon business segments, including CCS, lithium, and hydrogen, will contribute $2 billion to earnings growth through 2030. Backing this strategy, the U.S. Department of Energy recently confirmed a $225 million grant to Standard Lithium and Equinor for the Southwest Arkansas lithium project, which aims to generate 45,000 tons of lithium carbonate annually.

Moving forward, Exxon Mobil has a robust pipeline of major projects, including the China Chemical Complex and the Singapore Resid Upgrade, set to launch in 2025. Despite current market challenges, these initiatives are projected to deliver $3 billion in earnings potential by 2026. As an undervalued lithium stock, Exxon Mobil Corporation (NYSE:XOM) is maintaining its leadership in traditional energy operations while balancing its investments in low-carbon technologies.

Overall, XOM ranks 1st on our list of undervalued lithium stocks to invest in. While we acknowledge the potential of XOM, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.