Exxon Mobil (NYSE: XOM) stock hasn’t done much the past few years.
In fact, it’s currently trading at nearly the exact same level it was at all the way back in the fall of 2022.
It does pay a steady, reliable dividend that currently yields 3.5%. And the company has consistently increased that payout for 42 straight years.
But the stock is also down 9% in the past year, while the S&P 500 has climbed 18%.
So it looks like a dividend trap.
But that might not be the case much longer.
Exxon has quietly made some key changes to its technology and operations. That’s enhanced the company’s profitability and led to some upward revisions to its earnings forecast.
To that point, Exxon’s second-quarter earnings declined due to lower oil prices and refining margins, but they still exceeded analysts’ expectations.
More importantly, though, the company’s production increased, rising 1.7%, to 4.6 million barrels of oil equivalent per day.
That’s the highest amount of second-quarter production since Exxon merged with Mobil a quarter-century ago. And the long-term plan is to ramp production up to 5.4 mmboe/d by 2030.
Technology has been key to this improvement.
That is, like many major companies, Exxon Mobil has embraced AI, and it's getting results.
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One way AI has helped is with predictive maintenance, which is something I talked about before with respect to AI firm C3.ai (NYSE: AI).
C3’s AI software excels at predicting mechanical failures before they occur. That keeps things running smoothly, avoiding breakdowns and interruptions. AI can also optimize logistics, personnel, data sharing, and delivery and automate tasks that were previously done by people.
The end game is for AI to evolve to a point that oil discovery and drilling can be fully automated. But for now, increases to production and efficiency are its greatest reward.
Additional advances have also been made in the Permian Basin, where Exxon has deployed new technology to double the average rate of oil recovery.
Exxon has roughly 18 billion boe in the Permian Basin, and it’s now producing 20% more oil — nearly 4 billion boe — there.
That improvement in volume alone should be enough to move the needle on XOM stock.
Finally, on the efficiency front, Exxon has also been cutting costs and consolidating its workforce.
Structural cost reductions have totaled $1.4 billion so far this year. Roughly $13.5 billion has been saved cumulatively since 2019, and the company is on track to reach its goal of $18 billion in total cost savings by 2030.
Most recently, the company announced plans to lay off 2,000 workers, or up to 4% of its global workforce as it consolidates smaller offices into regional hubs.
Taking all of this — the technological advancement, higher production, lower costs, greater efficiency, and, ultimately, higher profitability — into account, the bull case for XOM becomes pretty clear.
Wall Street is adjusting accordingly.
Zacks Research, for example, just raised its Q4 2025 EPS estimate for Exxon Mobil from $1.56 to $1.61.
And ClearBridge Dividend Strategy said in a recent shareholder letter that it’s expanding its stake in Exxon Mobil.
For ClearBridge, the weakness in oil prices has left XOM ripe for the picking. It credited the company with “simultaneously lowering its cost per barrel and reducing its emissions intensity while growing its production.”
“This is a powerful combination that puts the company in its best position in decades,” ClearBridge noted. “Exxon Mobil is positioned to deliver double-digit returns, even without any improvement in oil prices. If stagflation occurs, Exxon Mobil’s returns should be even higher, while most other stocks will come under pressure, providing a sturdy portfolio hedge.”
Other price forecasts I’ve seen have put the stock at $120–$140 per share.
That would mean an improvement of 5%–20% from current levels — and in conjunction with the dividend payout, a strong and stable return on investment.
Fight on,
Jason Simpkins
Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more… He also serves as editor of The Crow’s Nest where he analyzes investments beyond the scope of the defense sector.
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