Can USA Rare Earth Stock Beat the Market?

USA Rare Earth (USAR +6.02%) has taken investors on a wild ride since its market debut. The company went public through a merger with a special purpose acquisition company (SPAC) in March 2025. Despite some dramatic swings, the company’s share price is up roughly 141% from market close on the day it started trading publicly.

On the other hand, the stock is also down roughly 33% from the lifetime high that it reached last October despite going on a huge rally recently. Is USA Rare Earth poised to beat the market over the next five years, or is this highly speculative stock too risky to invest in?

USA Rare Earth stock could be looking at a binary outcome

As of this writing, USA Rare Earth has a market capitalization of approximately $3.5 billion. Meanwhile, the minerals specialist has yet to record any revenue. USA Rare Earth is potentially positioned to see huge growth in conjunction with surging mineral processing and magnet production demand, but there’s a huge amount of speculation involved in charting the company’s performance outlook.

The stock saw big gains at the beginning of 2026 in conjunction with the company’s announcement that it had secured contracts to facilitate the launch of new mineral refining operations in France. Its Less Common Metals Europe SAS subsidiary is building a new plant that’s seemingly poised to produce 3,750 metric tons of refined material per year. The French government is providing a credit for up to 45% of the company’s equipment costs and reimbursing up to 130 million euros in real estate costs.

USA Rare Earth’s share price has also recently gotten a big boost from news that President Donald Trump’s administration is making moves to improve the United States’ rare-earth mineral reserves and sourcing capabilities.

Toward the end of January, USA Rare Earth announced that it had actually received a non-binding letter of intent suggesting that the U.S. Commerce Department and partners were lined up to provide the company with $1.6 billion in funding. In conjunction with the announcement, USA Rare Earth management also announced that the U.S. government is taking a stake in the company.

As a business that’s still in a pre-revenue state, USA Rare Earth is a risky investment. While it seems clear that the U.S. and its allies will be ramping up investments in rare-earth mineral sourcing and refining in order to diversify away from reliance on Chinese providers, the company still has a lot of proving to do.

On the other hand, USA Rare Earth’s risk-reward profile could still be worthwhile for investors who aren’t deterred by potential volatility. The company’s share price could see a big pullback following recent gains, but the potential for the stock to crush the market over the long term remains intact even after the recent valuation rally.