Why USA Rare Earth Stock Exploded 94% in Just 5 Weeks to All-Time Highs

Shares of USA Rare Earth (NASDAQ: USAR) jumped 15.2% in September, according to data provided by S&P Global Market Intelligence. If that still doesn't appeal to you, wait until you hear this: The stock is already up a whopping 57% in October, which means USA Rare Earth shares have rallied almost 94% in just about five weeks, as of this writing.

As its name suggests, USA Rare Earth is a rare earth minerals company. It controls the mining to the Round Top Mountain deposit in Texas and is building a manufacturing facility in Stillwater, Oklahoma, to manufacture sintered neodymium magnets. That means USA Rare Earth a vertically integrated rare earth minerals company, with operations spanning from mining to production of magnets.

USA Rare Earth produced its first batch of the magnets in early 2025 and expects to begin production at its Stillwater facility in the first quarter of 2026. The plant can produce 5,000 metric tonnes (MT) annually at full capacity, equivalent to hundreds of thousands of magnets per year.

Image source: Getty Images.

Then again, none of this is new information. So why did USA Rare Earth fly to the moon in recent weeks?

The company appointed Barbara Humpton, erstwhile CEO of Siemens USA, as the new CEO in September, and she just revealed that USA Rare Earth is in talks with the U.S. government for a potential investment.

Trump could be eyeing a stake in more rare earth companies

President Donald Trump is swooping in on critical minerals companies in recent weeks, buying stakes in them to boost domestic supply and reduce America's dependence on imported rare earth minerals.

Rare earth elements are vital for many industries such as semiconductors, electronics, electric vehicle (EV) motors, wind turbines, and medical imaging. Indeed, 80% of the rare earths consumed in the U.S. in 2024 were imported, with 77% coming from China. Trump wants to cut that down, which is why his administration is aggressively buying stakes in rare earth companies and converting federal grants into equity ownership.

One of the most notable government investments include the U.S. Department of Defense's acquisition of a 15% stake in rare earths giant MP Materials (NYSE: MP).

In an interview with CNBC in early October, Humpton revealed that USA Rare Earth is in "close communication with the administration" when asked about a potential deal with the U.S. government.

That sent USA Rare Earth stock flying.

Is USA Rare Earth stock a no-brainer buy?

USA Rare Earth has already signed up 12 customers from automotive, defense, and data center sectors for roughly 300 to 400 MT and is in active discussions with over 70 companies. Management expects to sell out its first 1,200 MT even before it commissions its first production line to full capacity by the end of next year.

In September, USA Rare Earth also struck an agreement to acquire U.K.-based company LCM for $10 million in cash and $6.74 million in stock. Since USA Rare Earth will use LCM's rare earths and strip cast alloys as feedstock for magnet production at Stillwater, the acquisition is a crucial step for USA Rare Earth to scale up production.

Although USA Rare Earth stock already commands a market cap of nearly $3 billion, investors typically bet on start-ups for their growth potential. There's plenty of that for USA Rare Earth, especially as it inches closer to production and first revenue.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.