3 Mining Stocks to Buy on an AI Boom

The article highlights investment opportunities in critical materials and energy solutions, driven by the escalating demands of artificial intelligence and data center infrastructure. It identifies Albemarle Corp. (ALB) as a potential long-term lithium play, trading at multi-year lows (0.8x book value) due to Chinese oversupply, but poised to benefit from AI-driven battery demand and a shift away from Chinese suppliers. Plug Power Inc. (PLUG) is presented as a speculative but increasingly attractive bet in green hydrogen, with improving financials, growing order books, and insider buying, driven by tech giants' interest in hydrogen fuel cells for data centers. Additionally, USA Rare Earth Inc. (USAR) is noted as a high-potential, albeit risky, rare earth producer aiming to address U.S. reliance on Chinese supply for AI-critical magnets, underscoring the strategic importance of these materials amidst global technological shifts and geopolitical tensions.

Analysis

The expansion of artificial intelligence infrastructure is creating a significant demand cycle for specific commodities and energy solutions, presenting distinct investment theses across the risk spectrum. Albemarle (ALB), a major lithium producer, is framed as a long-term value opportunity. The stock is trading at a multi-year low of 0.8x book value, a third of its long-term average, following an 80% collapse in lithium prices driven by Chinese overproduction. Despite this, ALB is projected to maintain 20% EBITDA margins and positive free cash flow, positioning it to benefit from future AI-driven demand for utility-scale batteries and a geopolitical shift towards non-Chinese supply chains. In contrast, Plug Power (PLUG) is presented as a high-risk, speculative turnaround. After a 91% decline from its peak, the company's outlook is improving with revenues expected to rise 16%, operating losses to shrink, and its order book for hydrogen fuel cell technology expanding to 8 GW. This reversal is catalyzed by interest from tech giants like Microsoft and Alphabet for data center backup power and is underscored by a significant bullish signal: the CFO's recent open-market purchase of one million shares. Finally, USA Rare Earth (USAR) represents a high-potential, yet highly speculative, play on domestic rare earth mineral production, aiming to address U.S. reliance on China. As a pre-revenue mining startup, it carries substantial execution risk, compounded by a SPAC-related insider lockup policy that could create selling pressure until May 2026, making it a story to monitor rather than a current investment.

Key Decisions for Investors

• Patient, value-oriented investors could consider accumulating a position in Albemarle (ALB) at its depressed valuation, recognizing its long-term potential from AI and EV demand, but should be prepared for a multi-year holding period as the lithium market works through its current supply glut.
• For investors with a high tolerance for risk, Plug Power (PLUG) offers a speculative opportunity based on its operational turnaround, significant insider buying, and growing demand for hydrogen fuel cells in data centers, though its history of volatility necessitates careful position sizing.
• It is prudent to place USA Rare Earth (USAR) on a watchlist rather than initiating a position, due to significant startup risks and a shareholder lockup creating a stock overhang until at least May 2026; a more attractive entry point may emerge after these risks subside.
• Investors should assess their portfolio's exposure to the AI-driven materials boom, considering that geopolitical tensions are increasing the strategic value of domestic or allied producers of critical elements like lithium and rare earth metals.