Stock Movers: MP, Applied Digital, Levi (Podcast)

MP Materials (MP) shares rose significantly, outperforming a broad market downturn driven by new China tariff threats, as investors sought refuge in the rare earth producer. Applied Digital (APLD) rallied on advanced discussions with a hyperscaler client for a second data center campus and better-than-expected first-quarter revenue. Meanwhile, Levi (LEVI) raised its full-year outlook and improved gross margins through pricing and channel optimization, but its shares fell after warning of increasing tariff impacts, raising global tariff expectations to 20% outside of China.

Analysis

The broader market experienced a sharp downturn following President Trump's threat of increased China tariffs, prompting a flight to safety. MP Materials (MP) shares notably rose to their highest levels since August 11, outperforming the market as investors sought refuge in rare earth producers amidst escalating trade jitters. This highlights the commodity sector's potential as a defensive play during geopolitical uncertainty.

Applied Digital (APLD) rallied significantly, driven by two key positive developments. The firm is in advanced discussions with a hyperscaler client for a second data center campus in North Dakota, signaling potential future growth. Additionally, its first-quarter revenue substantially exceeded estimates, attributed to one-time income from tenant fit-out services.

Conversely, Levi (LEVI) presented a mixed outlook, causing its shares to fall despite a raised full-year forecast. While the company reported improved gross margins due to higher prices and more profitable sales channels, its CFO warned of increasing tariff impacts in Q3. Levi also raised its tariff expectation for the rest of the world to 20%, up from 10%, indicating growing cost pressures.

Key Decisions for Investors

• Monitor MP Materials for continued outperformance as a potential hedge against escalating trade tensions and commodity inflation, given its rare earth exposure.
• Evaluate Applied Digital's progress on hyperscaler contracts and assess the sustainability of its revenue growth beyond one-time fit-out services.
• Carefully assess Levi's ability to mitigate increasing tariff costs through pricing power and channel mix, particularly given its revised global tariff expectations and recent share price decline.