The next market cycle is unlikely to be solely led by artificial intelligence (AI)-powered chips and software stocks alone. Instead, industrial companies that supply strategic materials, expand power availability and grid capacity, and deliver power and thermal management solutions are becoming critical to addressing the real-world constraints in the AI infrastructure buildout.
As investors shift from purely technology-driven narratives to companies that control scarce physical inputs required for AI infrastructure, a few industrial material suppliers could rise to prominence. Here's why MP Materials (MP +1.54%) fits the bill.
Image source: Getty Images.
What MP Materials does
MP Materials has evolved from being a rare earth mining and processing player to a vertically integrated company, encompassing upstream mining and concentrates, midstream separation and refining of rare earth metals (17 metals used to make magnets), and downstream production of high-performance permanent magnets. As the operator of Mountain Pass, the only major rare-earth mining and processing site in the U.S., the company plays a critical role in building a domestic rare-earth supply chain required for the production of high-performance magnets used in electric vehicles, defense systems, and across AI data centers and in semiconductor manufacturing processes.
NYSE: MP
Key Data Points
Neodymium-praseodymium (NdPr) oxide is one of MP Materials' most prominent and economically significant products, used in high-performance magnets.
In the third quarter, the company's NdPr oxide production soared 51% year over year to 721 metric tons, while the output of overall rare earth oxides (REOs, including NdPr) reached a record 13,254 metric tons. The company is focused on achieving its goal of 60,000 metric tons of annual output. The rapid expansion of production capacity may lead to further growth in the downstream magnet business.
In July 2025, MP Materials secured a public-private partnership with the U.S. Department of Defense, which includes a 10-year price floor protection agreement (PPA) at $110 per kilogram for NdPr products. Active as of Oct. 1, 2025, this partnership reduces downside risk for the company, while also improving the earnings visibility and predictability of cash flows for NdPr products compared to those of unprotected commodities. Subsequently, the company expects to return to positive earnings per share (EPS) in the fourth quarter, in line with the analysts' consensus estimate of $0.07.
Apple's $500 million commitment to MP Materials, which includes long-term purchases of American-made rare-earth magnets and the buildout of a dedicated rare-earth recycling line, has further improved demand visibility and reduced the downside risk for MP's downstream magnetics business. The company has already received a $40 million prepayment from Apple for producing magnets from recycled rare earth materials, and expects a total of $200 million tied to the buildout of a recycled magnet production facility.
MP Materials is also working with General Motors on the commercial-scale qualification (formal technical and commercial approval process) of permanent magnets, and expects magnet sales to GM to commence in the second half of 2026.
MP Materials' shares have gained over 242% in the past year. Yet considering its critical role in the rare-earth supply chain and improving earnings visibility, the company is well-positioned to soar even higher in the coming months.
