The rally in rare earth stocks continued on Monday, with USA Rare Earth stock (NASDAQ: USAR) surging 17% in the premarket trading.
The surge began on Friday, after US President Donald Trump threatened a harsh response to China’s restrictions on exports of rare earth minerals and announced additional 100% tariffs on the Asian giant.
USA Rare Earth’s stock rise reflects strong market speculation about the US boosting its rare earth production capabilities.
USA Rare Earth stock: Factors behind bullish momentum
USA Rare Earth stock is catching some serious attention lately, and for good reasons.
Analysts are pointing to a few big moves driving the buzz.
Roth Capital analysts doubled their price target to $40, praising the company for building a fully domestic rare earth magnet supply chain, completely outside China.
That’s huge, especially as China keeps tightening its rare earth exports, which the US really relies on for defense and tech.
On top of that, CEO Barbara Humpton mentioned talks with the Trump administration, hinting at possible government backing and strategic partnerships that could really boost the company’s growth.
On top of that, MarketBeat points to a “Moderate Buy” consensus for USAR, with price targets averaging around $26.
A lot of the optimism comes from the company’s projects in Texas and Oklahoma, which are expected to go live in early 2026.
Their push to reduce US reliance on Chinese rare earths is right in line with the current geopolitical climate, which makes them an attractive pick for investors looking at critical minerals.
Sure, there are a few sell ratings out there, but overall, analysts are pretty positive, especially with government interest in securing domestic supply chains and USA Rare Earth being in a prime spot to take advantage of that trend.
Why the rally may be short-lived?
All things considered, the investors must not get too excited about the recent rally of USA Rare Earth stock, as it is primarily driven by geopolitical dynamics, subject to quick changes.
President Donald Trump appears to have softened his stance on China, easing some of the escalating trade tensions that had initially spurred investor optimism.
Despite previously announcing plans for a 100% tariff on Chinese imports starting November 1 and imposing export controls on critical software, Trump recently conveyed a more conciliatory tone.
On social media, he suggested that the US aimed to help, not harm, China and expressed hope that everything with the Chinese leadership would “turn out alright.”
This shift signals potential de-escalation in the ongoing trade and rare earth mineral disputes.
The analysts caution that if the US administration decides to dial back aggressive tariff policies or strikes a deal with China to avoid major disruptions, some of the urgency that’s been driving USA Rare Earth’s stock higher could fade.
Basically, the geopolitical “risk premium” that’s been fueling a lot of the recent gains might shrink, which could weaken the bullish case that’s largely built on supply chain security and potential government backing.
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