Prediction: Industrial Stocks Could Take the Lead in the Next Market Cycle. Here's 1 to Watch.

MP Materials' strategic position in the U.S. rare earth supply chain can position it as a beneficiary of the AI infrastructure buildout.The next market cycle is unlikely to be solely led by artificial intelligence (AI)-powered chips and software stocks alone. Instead, industrial companies that supply strategic materials, expand power availability and grid capacity, and deliver power and thermal management solutions are becoming critical to addressing the real-world constraints in the AI infrastructure buildout. As investors shift from purely technology-driven narratives to companies that control scarce physical inputs required for AI infrastructure, a few industrial material suppliers could rise to prominence. Here's why MP Materials (MP +1.54%) fits the bill. Image source: Getty Images. What MP Materials does MP Materials has evolved from being a rare earth mining and processing player to a vertically integrated company, encompassing upstream mining and concentrates, midstream separation and refining of rare earth metals (17 metals used to make magnets), and downstream production of high-performance permanent magnets. As the operator of Mountain Pass, the only major rare-earth mining and processing site in the U.S., the company plays a critical role in building a domestic rare-earth supply chain required for the production of high-performance magnets used in electric vehicles, defense systems, and across AI data centers and in semiconductor manufacturing processes. ExpandNYSE: MPMP MaterialsToday's Change(1.54%) $0.94Current Price$62.00Key Data PointsMarket Cap$11BDay's Range$59.35 - $62.9852wk Range$18.64 - $100.25Volume9.2MAvg Vol12MGross Margin-2627.54% Neodymium-praseodymium (NdPr) oxide is one of MP Materials' most prominent and economically significant products, used in high-performance magnets. In the third quarter, the company's NdPr oxide production soared 51% year over year to 721 metric tons, while the output of overall rare earth oxides (REOs, including NdPr) reached a record 13,254 metric tons. The company is focused on achieving its goal of 60,000 metric tons of annual output. The rapid expansion of production capacity may lead to further growth in the downstream magnet business.Advertisement In July 2025, MP Materials secured a public-private partnership with the U.S. Department of Defense, which includes a 10-year price floor protection agreement (PPA) at $110 per kilogram for NdPr products. Active as of Oct. 1, 2025, this partnership reduces downside risk for the company, while also improving the earnings visibility and predictability of cash flows for NdPr products compared to those of unprotected commodities. Subsequently, the company expects to return to positive earnings per share (EPS) in the fourth quarter, in line with the analysts' consensus estimate of $0.07. Apple's $500 million commitment to MP Materials, which includes long-term purchases of American-made rare-earth magnets and the buildout of a dedicated rare-earth recycling line, has further improved demand visibility and reduced the downside risk for MP's downstream magnetics business. The company has already received a $40 million prepayment from Apple for producing magnets from recycled rare earth materials, and expects a total of $200 million tied to the buildout of a recycled magnet production facility. MP Materials is also working with General Motors on the commercial-scale qualification (formal technical and commercial approval process) of permanent magnets, and expects magnet sales to GM to commence in the second half of 2026. MP Materials' shares have gained over 242% in the past year. Yet considering its critical role in the rare-earth supply chain and improving earnings visibility, the company is well-positioned to soar even higher in the coming months.Read NextDec 11, 2025 •By Steven PorrelloWill MP Materials Stock Have Room to Run in 2026?Nov 29, 2025 •By Lee SamahaWhat to Know Before Buying MP Materials StockNov 26, 2025 •By Steven Porrello5 Reasons to Buy MP Materials Stock Like There's No TomorrowNov 15, 2025 •By Reuben Gregg BrewerIs MP Materials Stock a Millionaire Maker?Nov 2, 2025 •By Steven PorrelloIs This Nevada-Based Company a Strong Play for Growth-Oriented Portfolios?Oct 16, 2025 •By Steven PorrelloWhat Is One of the Best Industrials Stocks to Buy Now?About the AuthorManali Pradhan, CFA, is a contributing Motley Fool stock market analyst covering technology, pharmaceuticals, medical devices, and industrial sectors. Manali brings prior experience as a healthcare analyst and team lead at Market Realist, a data equity analyst at Morgan Stanley, and a data analyst at Deloitte Financial Advisory Services. She holds a bachelor’s degree in computer engineering and a master’s in finance from Mumbai University.TMFManaBStocks MentionedMP MaterialsNYSE: MP$62.00 (+0.02%) $+0.94*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.Advertisement