US-China AI Race Hinges on Rare Earths and Critical Minerals Supply

The upcoming Trump-Xi meeting is expected to spotlight the intensifying artificial intelligence race between the United States and China, with the winner poised to become the world’s preeminent nation. While the U.S. leads in chips and advanced machines and Taiwan dominates manufacturing, China holds a commanding position in rare earths and critical minerals essential for these technologies.

Clear Street senior research analyst Tim Moore highlighted China’s dominance in the sector during a discussion on the AI competition. China controls 85-90% of both the supply of rare earths and their processing capabilities. The U.S. has historically relied on imports for these critical minerals, with limited domestic flags in the space, but the current administration is making a major push to develop secure domestic production.

“The U.S. kind of woke up about a year ago and said let’s invest in this and get our own, for security purposes, get our own domestic production done,” Moore noted.

Among the opportunities in critical metals, Moore pointed to several companies positioned to benefit. These include a Greenland mining project—one of the largest rare earth deposits outside China—with expectations to start generating revenue around this time next year. The project, associated with ticker ALOI, aims to be one of the first to advance from mine to magnets.

He also referenced U.S. Rare Earth, which already has production in Canada and a plant for magnets and processing rare earths in Ohio. The company plans significant spending on the facility in two phases over the next couple of years, with some revenue expected by the end of this year. Additionally, Moore covers Evolution Metals and Technology, which is pursuing its own mine-to-magnet production capabilities.

The discussion extended to related infrastructure needs driven by AI growth. Even before the data center boom, the U.S. electric power grid—described as hundred-year-old in parts—has faced shortfalls, creating urgency for upgrades and replacement.

On the power grid sector, Moore upgraded his target on MTZ, the second-biggest electricity construction company in the U.S. and a major player in building oil and gas pipelines. The upgrade was robust, moving from $440 to $500, following the company’s investor day where it outlined achievable targets for 2028 supported by an 18-month backlog and visibility on electric power grid builds. MTZ represents a direct play on AI-driven demand.

Moore also likes MYR Group, which focuses on power grid substations, transmission, and distribution. The stock has doubled since Clear Street initiated coverage in December, and the company offers strong revenue visibility similar to other infrastructure plays. He additionally highlighted a position around the 250 level in another name at the center of data center energy needs.

On energy markets amid geopolitical tensions, Moore discussed opportunities in oil-related stocks following events like the Iran conflict. Oil prices typically spike during conflicts and then ease. He pointed to a mid-cap Texas stock, one of the few U.S. names hedged on oil this year, which benefits from sustained higher prices, though prices are eventually expected to moderate. Comstock was also cited as another favored name in the space.

The AI race and supporting infrastructure buildout continue to drive investment focus across critical minerals, power grid construction, and related energy plays as the U.S. seeks to reduce dependencies and strengthen its position.