At the Pennsylvania Defense & Innovation Summit in July, President Donald Trump provided investors with some unusually direct advice.
According to the full transcript of his July 15 remarks, Trump said to the business and defence leaders, “I’ll tell you how to make money, do magnets,” adding that “we need magnets.”
It sounded as if it were almost too simple.
The reason for the investment is not.
Rare earth permanent magnets are now part of a growing number of technologies which Washington regards as strategically important, such as drones, robotics, advanced electronics, semiconductor manufacturing and increasingly the infrastructure that supports artificial intelligence.
When investors are looking for magnet stocks, the following three companies are particularly noteworthy: MP Materials, USA Rare Earth and Energy Fuels.
They are not equally attractive and are by no means equally risky.
Why Trump Keeps Talking About Magnets
Trump’s comments weren’t entirely unexpected.
In January the administration’s proclamation on processed critical minerals stated that rare earth permanent magnets are essential to “nearly all electronics and vehicles”; it also cautioned that U.S. production fulfils only a small part of defence needs and explicitly named artificial intelligence and data centres as factors behind the increasing demand for critical minerals.
It means that magnets are more than just another commodity to trade.
They are now included in the industrial policy.
The rare earth elements related to magnetism identified by the U.S. Geological Survey currently include terbium, dysprosium and gadolinium, all of which are found in supply chains that have some of the highest disruption risks.
In reply, the government is providing financing, guaranteeing purchases, offering incentives for domestic manufacturing and making direct investments.
Trump said it in a more vivid way.
“Do magnets.”
AI Is Adding Another Source of Demand
The most obvious physical need of AI is semiconductors, with Nvidia GPUs receiving the spotlight.
An AI data center is certainly not just a rack of chips.
The International Energy Agency says that data centres used about 415 terawatt-hours of electricity globally in 2024 and expects this figure to increase to around 945 TWh by 2030 in its base scenario. At efficient hyperscale facilities, cooling alone can account for approximately 7% of electricity consumption and more than 30% at certain enterprise data centres.
Those facilities need cooling equipment, pumps, fans, storage systems, backup equipment, and other motor-driven infrastructure.
Rare earth magnets are also being used in an increasing number of applications in robotics and in autonomous machines, which may make the magnet aspect more significant as AI moves from being purely software to what companies are now more frequently referring to as physical AI.
The magnets that MP Materials intends to produce at its new plant in Texas will be used in a variety of technologies, including AI data centres, robotics, drones and advanced semiconductor fabrication.
Yet investors ought to consider the scale in relation to the overall situation.
AI is just one reason for demand. It is not the whole pull of the magnet idea. Defense, cars, drones, factory automation, electronics, and robots could be just as important.
The fact that diversification could make the investment case stronger.
MP Materials Looks Like the Strongest Magnet Stock
For anyone seeking the best direct investment in a U.S. magnet company, MP Materials (NYSE: MP) currently has the strongest case.
The MP company is already running the rare earth mine at Mountain Pass in California and has been developing downstream processing and magnet manufacturing capacity in Texas.
The company’s second-quarter 2026 results indicate that this situation is going beyond the stage of mere development.
The company stated that its NdPr production had reached 840 metric tons, a rise of 41% compared with the previous year, while NdPr sales increased by 127%. The Magnetics segment earned $16.5 million in revenue for the quarter and $7.5 million in adjusted EBITDA.
The government has a demand that is rare among new industries.
As a result of its agreement with the Pentagon, the government has committed to maintaining a price floor of $110 per kilogram for certain NdPr products over a period of 10 years. Furthermore, the agreement includes support measures aimed at ensuring that customers buy the output from MP’s planned 10X magnet facility for 10 years following its construction.
That greatly alters the risk profile.
Then there is Apple.
Apple has committed $500 million to a long-term partnership with MP Materials in order to buy rare earth magnets that are made in America and to increase its capacity for recycling and manufacturing in the United States.
The company is currently developing the 10X campus in Northlake, Texas, at a cost in excess of $1.25 billion, and this move is expected to increase its total annual capacity for NdFeB magnets to about 10,000 metric tons when the project is running. Work on commissioning is set to start in 2028.
The problem is the risk involved in valuation and in carrying out the transaction. The company is no longer an untapped rare-earth business, and investors have already priced in a good deal of future growth.
Of the three magnet stocks, MP currently has the most evident combination of current production, government support, major customers and real magnet revenue.
USA Rare Earth Offers More Upside and More Risk
USA Rare Earth (Nasdaq: USAR) is the more speculative of the two options.
Its ambitions are enormous.
The company is establishing an integrated supply chain which includes mining, processing, the production of rare earth metals and finished neodymium magnets.
In June USA Rare Earth completed agreements which would give it potential access to as much as $1.6 billion from the U.S. Department of Commerce, comprising up to $277 million in federal funding and $1.3 billion in senior secured loan capacity linked to project milestones.
The company has likewise chosen Blacksburg, South Carolina, as the site for an operation which is intended to deal with 6,400 metric tons per year of NdFeB magnets.
Together with its proposed expansion in Stillwater, USA Rare Earth anticipates having a total domestic capacity of about 10,000 metric tons per year.
This places its intended scale within serious territory.
But USAR still depends much more on what happens next than MP.
In the second quarter USA Rare Earth recorded an adjusted net loss of $33.5 million and used about $57 million of operating cash over the period; its expansion strategy also includes major acquisitions and facilities which are still under development.
That would make USAR’s situation potentially more explosive if its projects are successful, but at the same time considerably more speculative.
It could be the stock among the group that offers the greatest potential for gain for those investors who are willing to accept development risk.
Energy Fuels Is Becoming the Wild Card
There’s also Energy Fuels (NYSE American: UUUU).
Energy Fuels is still known by many investors mainly as a uranium company.
The description is now out of date.
The company Energy Fuels is trying to develop a wider business in critical materials, covering everything from mining and the separation of rare earth elements to the production of finished magnets.
The recent acquisition of Australian Strategic Materials has received the approval of shareholders. By doing so, ASM will be adding to the commercial-scale capabilities for producing rare earth metals and alloys at Energy Fuels’ present White Mesa operations in Utah.
The major move is the proposed acquisition of VAC for $1.9 billion, which is a significant deal involving an advanced magnet manufacturer.
If the transaction is completed, Energy Fuels will move much further down the value chain and the resulting company will have access to the automotive, defence, robotics, electronics and data-centre markets.
It could turn UUUU from a company mainly involved in mining into one that is more like a vertically integrated strategic-materials company.
It also presents considerable risk in terms of acquisition and integration.
The VAC transaction does not expect to be completed until early 2027 and is still subject to regulatory approvals and other conditions.
That means Energy Fuels is the wildcard for investors.
The company is already engaged in the production of magnets.
USAR is making one vigorously.
Energy Fuels is making an attempt to gain a foothold in one.
The Magnet Trade Is Bigger Than AI
Trump’s suggestion to ‘do magnets’ should not be regarded as a standard piece of advice from the president.
It must be seen as an indication of the direction in which American industrial policy is heading.
Washington would like to see more domestic magnets. Defence contractors require them. The car manufacturers need them. Robotics companies need them as well. Those involved in advanced electronics use them too. Another level of demand is created by AI infrastructure.
The government is actually investing real money in the initiative.
MP Materials is currently the leading U.S. magnet stock.
If one is aiming for a much greater potential gain but at the same time assuming a considerably higher level of development risk, then USA Rare Earth should be given attention.
Energy Fuels could provide the most unusual option by combining its present uranium and critical minerals operations with a bold step in the direction of a full mine-to-magnet business.
The key thing is that the opportunity isn’t due to magnets suddenly becoming popular.
They were already being used as a basis for modern technology.
AI, robotics, and drones, together with America’s attempt to reestablish domestic manufacturing, are simply making it harder for investors to ignore that dependence.
This article is provided for informational and analytical use and should not be taken as personal investment advice. Shares in rare-earth and development-stage mining companies can be very volatile, and any planned facilities, acquisitions or government financing are still subject to risks relating to execution and regulation.